Manufacturers in dilemma over soaring fuel prices

By Merit Ibe                                               [email protected]

Manufacturers in Nigeria have expressed concern that current soaring fuel price is threatening their continued existence.

They have therefore urged the Federal  Government to  rise to their defense  and save the sector  from total collapse in an already struggling  economy.

The operators under the aegis of Manufacturers Association of Nigeria (MAN),  noted that  they were in the worst of times with the cost at almost N1,000/litre amid a trend of astronomical increase in the cost of diesel coupled with other challenges bedeviling the sector.

While lamenting the decision of GlaxoSmithKline to shut down its operations in the country after over five decades in business, MAN argued that  such decision came out of the travails that many multinational firms have had to make in recent years with the adverse effects on the economy.

Despite presenting international businesses with the largest market on the continent, the nation still suffers from worrying economic slow-down decisions like this, which are often provoked by the rising cost of doing business, worsened by the epileptic power supply and weak infrastructural backing, among others.

MAN therefore urged the Federal  Government to  save the sector  from total collapse as failure to do so would be disastrous for an already struggling  economy.

Commenting on the dire state of the manufacturing sector in the country, Chairman, MAN, Imo/Abia, Dr. Jude Eluma, said without any doubt, more businesses, especially MSMEs would soon pack up due to harsh environment.

“Manufacturers depend 70 percent on diesel powered generators and with the cost now up at roof top, and most factories might close up soon.

“Government should rise up to the occasion to save manufacturing as a critical real sector of  the economy.”

He also advised government to be steady and decisive in its policies to enhance smooth flow of activities.

For his part, Chairman, MAN Apapa Branch, Frank Ike Onyebu, viewed that the astronomical hike in the price of diesel is a major cause of concern for the manufacturing sector

He explained that manufacturing sector which has the potential of contributing more than 25 per cent to Nigeria’s GDP, is currently doing less.

He added that the slow growth of the sector as a whole is attributable to a myriad of factors including infrastructural deficiency, insecurity, global and domestic supply chain disruptions, foreign exchange liquidity, weak consumer spending and high energy cost.

“This problem would not be very critical if we have stable power supplies to industries. Unfortunately the power supply situation is getting worse rather than getting better. This is made worse by the advent of the AfCFTA, which is already at the implementation stage.

The obvious implication is the stark reality of the uncompetitiveness of Nigerian manufacturers.”

Commenting on the challenges facing Nigerian manufacturers, the Centre for the Promotion of Private Enterprise (CPPE), noted that escalating energy costs, alongside poor power supply. , among others  have consequences for the economy as these reflect on the high production and operating costs across all sectors.

Onyebu also identified high haulage costs due to diesel prices as well as potential suspension of operations for businesses that are unable to pass the costs to the consumers.

“Diesel is a vital gas for producers not linked to gasoline distribution strains, in addition to being essential for logistics and distribution.”

For President of the Lagos Chamber of Commerce and Industry (LCCI), Michael Olawale-Cole, the cost of diesel at record levels and persisting poor power supply, businesses are running on unsustainable costs and producing at uncompetitive prices.

Olawale-Cole lamented that the rising energy costs will continue to aggravate production costs which may lead to restrained manufacturing and eventual job losses.”