Nigerian businesses that heavily rely on diesel for their operations are grappling with increased operational costs due to a combination of factors, including the implementation of a new tax and the depreciation of the national currency.
Despite opposition from marketers, the federal government has recently begun enforcing a 7.5 percent value-added tax (VAT) on diesel imports. This new tax comes at a time when the Nigerian naira has significantly weakened against the dollar.
Reports indicate that various filling stations in different regions of Nigeria are selling diesel at varying prices, ranging from N700 to N880 per litre. Businesses across sectors are feeling the pinch, as diesel price hikes have a cascading effect on their costs.
Industry insiders and representatives have voiced their concerns. Abdulkadir Mustapha, the spokesperson for the Independent Petroleum Marketers Association of Nigeria in Borno State, highlighted the challenges posed by exchange rate fluctuations. Hassan Audu, a commercial diesel supplier in Abuja, underscored the growing cost of purchasing and distributing diesel.
The Association of Small Business Owners of Nigeria expressed worry about the impact on manufacturers, suggesting that rising diesel prices could lead to business closures and unsustainability. Sola Obadimu, the director-general of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, noted that rapid price changes disrupt businesses’ budgeting and planning processes.
For manufacturers, the situation is particularly dire. An anonymous official from the Manufacturers Association of Nigeria described the diesel price hike as a serious problem that affects all sources of energy for production. The high cost of diesel has prompted businesses to cut back on usage, impacting their operations.
As the cost of diesel continues to rise, businesses are facing the challenge of balancing their operational expenses and profitability. The uncertainty brought about by these developments is prompting calls for urgent economic measures to address the situation and alleviate the burden on businesses.