The price of Automotive Gas Oil, also known as diesel, has risen to a high of N250 per litre, with businesses taking a beating on the back of rising energy costs. Many businesses in the country rely heavily on diesel-powered generators for electricity as power supply from the national grid remains poor.
PUNCH correspondent observed on Monday that some filling stations in Lagos had increased the pump price of diesel to N250, while many others sold it at around N230-N245.
The average price paid by consumers for diesel increased by 1.76 per cent month-on-month and 14.52 per cent year-on-year to N211.64 per litre in September from to N207.98 in August, according to the National Bureau of Statistics.
It said states with the highest average price were Borno (N245.83), Taraba (N235) and Sokoto (N228.33), while those with the lowest average price were Edo (N197.28), Katsina (N195.63) and Rivers (N190). The Chief Executive Officer/Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Clement Isong, in an interview with our correspondent, attributed the diesel price hike to the increase in global crude oil prices and inadequate access to foreign exchange at competitive rates by private marketers.
Unlike Premium Motor Spirit (petrol), diesel has been deregulated and its pump price is adjusted to reflect the reality in the global crude oil markets. International oil benchmark, Brent crude, recently rose to a high of $86 per barrel.
“The challenge in Nigeria is that MOMAN members struggle to access forex at competitive rates. If you are going to access forex at N360-N361/$1, then your imports will be uncompetitive; when the NNPC, or whoever else is importing, has access to forex at $305. So, if they try to import, the landing cost of the product will be uncompetitive.
They are not importing now because if they do so, they will lose money,” Isong explained. The Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, described the impact of the diesel price hike on businesses as “very severe.”
“Our members have been raising concerns about this. Any time there is increase in crude oil price, the flip side for us in the private sector is increase in energy cost.
It is a major issue; some businesses consume a lot of energy like those in the manufacturing sector; even hotels and hospitals, they run almost permanently on generators. So, the impact of the diesel price hike will be very high,” Yusuf told our correspondent.
He added, “The high oil price also heavily penalises businesses because their energy costs go up significantly and that affects the cost of production; it affects their prices, sales, turnover and profits. It has a chain effect on their operation. So, it is something to worry about.
“If we our refineries are working well, we would not be subjected to this kind of skyrocketing cost of diesel.”
(Punch)
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