Most major businesses in the country that depend on diesel to power their operations may have to lay off thousands of workers if the ongoing diesel crisis is not resolved swiftly.
The price of diesel has soared by some 200 per cent, rising from between N250 and N300 per litre to as much as between N750 and N800 per litre. Most business operators in Nigeria rely on diesel-fired generators to run their operations.
Business leaders and economic experts have argued that so many workers may be laid off from employment if nothing is done fast about the cost of the product.
The Manufacturers Association of Nigeria (MAN), described the soaring price of diesel across the country as “very worrisome,” pointing out that the situation is negatively impacting the productive sector of the economy.
Director-General, Manufacturers Association of Nigeria (MAN), Mr. SegunAjayi-Kadir, said manufacturers, who largely rely on diesel to run their factories, were contending with huge costs to sustain their production line.
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The MAN boss wondered how much longer manufacturers can withstand the unending increase and what implication lies ahead for the nation’s economy.
He said this is so considering that diesel is deregulated, a situation that removes the equation for a buffer to the cost, hence manufacturers do not have a choice than to buy at the general rate.
President, Association of Telecoms Companies of Nigeria (ATCON), Ikechukwu Nnamani, said the punitive diesel price has almost grounded the operations of the telecoms sector.
“It has had a negative impact on the operations of telecom services providers. The high cost of diesel coincided with lack of public power supply nationwide so the costs of offering services have drastically increased.
According to him, telecom infrastructure must operate on a 24-hour basis. To this end, service providers have no option but to keep operating all the infrastructure while hoping that the cost of diesel will reduce or there will be more availability of power supply from the national grid.
Chairman, Association of Licensed Telecom Companies of Nigeria (ALTON), Gbenga Adebayo, said the rising diesel cost has taken a terrific toll on operation expenditure (opex).
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“It has a very significant impact on the cost of our operations. We are looking unto the government to help curtail the trend by providing a mechanism to stop the trend of increase and provide us with any possible intervention to minimise the effect of the resultant high cost of providing service so that we don’t transfer any burden of increases to the end users. We are appealing to the government,” Adebayo said.
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) said it was extremely concerned about rising prices of petroleum products particularly diesel and aviation fuel and their far-reaching implications for the economy.
National President, NACCIMA, Ide Udeagbala said these petroleum products are used in the production and transportation processes of both the public and private.
“We expect rising inflation, a further erosion of the purchasing power of the population, and redistribution of wealth that plunges more of the population below the poverty line,” Udeagbala said.
Ajayi-Kadir, however, said the solution may not out-rightly solve the problem, but will help cushion the effect. “For instance, the government can remove the 7.5 per cent Value Added Tax (VAT) on the AGO to provide a soft landing for manufacturers,” he suggested.
Also, on the other hand, the government, he said, should urgently make provision for the lack of infrastructure that makes the business environment habitable for the manufacturing sector.