It’s A Terrible Situation’ — Bakers, Manufacturers Lament As Diesel Nears ₦2,000

The rising cost of diesel is putting additional pressure on Nigerian businesses, with manufacturers and bakers warning that the sharp increase could further raise production costs and push up the prices of goods.

According to Ireporter Online, diesel prices have risen to between ₦1,800 and ₦1,900 per litre in some parts of the country, bringing the cost of the product close to the ₦2,000 mark.

The development has heightened concerns among businesses that rely heavily on diesel to power generators, machinery and other equipment, particularly amid persistent challenges with electricity supply.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has called for urgent measures to prevent the rising cost of diesel from worsening the challenges confronting businesses and consumers.

CORAN’s Publicity Secretary, Eche Idoko, said diesel remained critical to several sectors of the economy, including manufacturing, agriculture, transportation and telecommunications.

He warned that sustained increases in diesel prices would further drive up production and transportation costs for businesses already struggling with a difficult operating environment.

Idoko advocated increased domestic refining as a long-term solution, urging the government to ensure that local refineries have adequate access to crude oil so they can operate closer to their installed capacities.

The association maintained that the Dangote Refinery and Nigeria’s modular refineries should be viewed as complementary local assets capable of reducing the country’s dependence on imported refined petroleum products.

CORAN said Nigeria’s modular refineries have a combined installed capacity of about 35,000 barrels per day and could produce millions of litres of diesel daily if they operate at full capacity.

The association also pointed to the Dangote Refinery’s diesel production, arguing that increased output from both large-scale and modular refineries could significantly reduce the country’s reliance on imported diesel.

CORAN therefore called on the Presidential Committee on Naira-for-Crude to ensure adequate crude supply to the Dangote Refinery while extending similar arrangements to modular refineries.

The association also urged the Federal Government to establish commercially sustainable crude supply arrangements that would enable local refineries to operate more efficiently and help stabilise the domestic diesel market.

Meanwhile, bakers and manufacturers said the impact of the diesel price increase was already being felt across their operations.

The President of the Premium Bakers’ Association of Nigeria, Engr. Emmanuel Onuorah, described the situation as extremely difficult for businesses, particularly manufacturers that depend on diesel to power their facilities.

Onuorah said diesel, which sold for about ₦800 per litre around the same period last year, had now risen to between ₦1,800 and ₦1,900 per litre depending on the location and source.

He said the increase had pushed one of the major components of production costs up by about 150 per cent, making it increasingly difficult for businesses to remain profitable.

“The situation is crazy,” Onuorah said, expressing concern over the ability of businesses to remain afloat amid rising operational expenses.

He explained that the baking industry had received some relief from flour millers, who had largely kept their prices stable and, in some cases, introduced slight reductions.

However, he said the relief had been overshadowed by rising electricity costs, frequent power outages and the increasing expense of alternative sources of energy, particularly diesel.

“It’s a terrible situation we are finding ourselves in. I don’t even mind. I just pity every manufacturer in Nigeria, no matter what you are producing,” he said.

Onuorah added that the consequences of rising diesel prices were extending beyond business owners to workers and households, as transportation costs continued to increase alongside food prices, rent, school fees and other living expenses.

He questioned how workers on fixed salaries would cope with the rising cost of living while employers themselves were struggling with increased operating expenses.

Economic expert Dr Marcel Okeke also warned that the real sector would continue to face difficulties as long as energy costs remained high.

Okeke said manufacturers were particularly vulnerable because increases in the prices of refined petroleum products immediately translate into higher operating expenses.

“The real sector, which is manufacturing, will continue to have the short end of the whole deal,” he said.

He noted that the challenge extended beyond manufacturers because many Nigerian households, businesses and institutions continue to depend on generators due to inadequate electricity supply.

Okeke described Nigeria as a “generator economy,” stressing that increases in the prices of petroleum products have a direct impact on both businesses and consumers.

He further warned that the high cost of doing business was undermining Nigeria’s competitiveness and could discourage investment in the country.

The latest concerns also come amid warnings from the Manufacturers Association of Nigeria over the performance of the industrial sector.

The association recently raised concerns over declining industrial growth, citing factors including high energy costs, exchange-rate pressures, interest rates and electricity tariffs.

MAN Director-General, Segun Ajayi-Kadir, said the decline in manufacturing’s contribution to the economy highlighted the severe cost pressures facing domestic manufacturers.

With diesel prices approaching ₦2,000 per litre in some locations, businesses are increasingly concerned that higher energy and transportation costs could eventually be passed on to consumers through increased prices of goods and services.

CORAN has consequently called for stronger support for domestic refining and reliable crude supply to local refineries, arguing that increased local production remains critical to reducing import dependence and stabilising the downstream petroleum market.