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Manufacturers threaten to cut jobs, raise prices due to rising cost of diesel

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Surging diesel prices will force Nigerian manufacturers to cut jobs, curb operations and raise prices, the head of the main industry association said.

The cost of the fuel has more than doubled this month to as much as N800 per liter in Africa’s biggest economy, according to Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN).

That compares with an average of N312 a liter in February and N288 a liter naira in January, National Bureau of Statistics (NBS) data shows.

Power normally accounts for as much as 40 percent of factories’ costs in Nigeria, according to the association. Fuel prices have soared since Russia invaded Ukraine last month, raising costs for manufacturers in Nigeria, where many businesses rely on diesel-fired generators for power in the absence of reliable grid electricity.

READ ALSO: Prices of LPG rise 14% as Nigeria feels impact of Russia-Ukraine war

“Having a major cost element increasing by more than 100 percent is a cause of trouble” that will lead to job losses, reduced shifts and higher prices for consumers, Ajayi-Kadir said in an interview with Lagos-based TVC News.

Manufacturing accounts for about 13 percent of output in Nigeria. Before this month’s rise, the diesel price in Nigeria was among the lowest in sub-Saharan Africa, according to data compiled by Bloomberg. At 800 naira, it would be among the highest on the continent.

Nigerians are also contending with gasoline shortages that have resulted in long queues outside filling stations after the government turned away cargoes of the fuel for containing too much methanol.

At the same time, about 40 percent of the population that’s connected to the country’s dilapidated national electricity grid is enduring lengthier power outages than usual.

The state-owned Nigerian National Petroleum Company Limited (NNPCL). said this week it would license local airlines to import aviation fuel themselves in an effort to stop them canceling scheduled flights amid a shortage.

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