NECA seeks urgent reforms over rising energy costs

The Nigeria Employers’ Consultative Association (NECA) has sounded the alarm over the growing strain on businesses and households from rising domestic energy costs, driven by surging global oil prices and local market constraints. The association warned that without immediate interventions and long-term reforms, Nigeria risks worsening inflation, business closures, and job losses.

Director-General of NECA, Adewale-Smatt Oyerinde, described the situation as a “paradox” for the country. “What we are witnessing is Nigeria’s oil paradox. Rising crude oil prices are pushing up domestic energy costs, squeezing businesses and worsening the cost of living for citizens,” he said. Petrol prices have exceeded N1,300 per litre in some areas, while diesel is approaching N1,800 per litre, sending ripples across transportation, manufacturing, agriculture, and logistics.

Oyerinde explained that energy costs underpin the entire economy. “Once fuel prices rise, the effects are immediate and widespread: transport costs increase, food prices rise, and the overall cost of doing business escalates,” he said. For many firms, especially those reliant on diesel, profit margins are shrinking, and operations are being scaled back. “Businesses are being forced to either pass on costs to consumers or reduce output,” he added.

While geopolitical tensions in the Middle East have contributed to the spike in oil prices, Oyerinde highlighted structural inefficiencies in the domestic energy sector. “This situation is not only driven by external factors; it reflects long-standing supply challenges, underinvestment, and infrastructure gaps in the energy value chain,” he noted.

To address the crisis, NECA is urging short-term solutions such as stabilising downstream supply, easing price pressures, and providing targeted support to vulnerable sectors. “The government must act swiftly to mitigate supply constraints, stabilise prices, and protect critical industries,” Oyerinde stressed.

Looking beyond immediate relief, NECA emphasised the importance of long-term structural reforms. Strengthening institutions, enhancing transparency, and investing in sustainable energy solutions will be critical to shielding the economy from future shocks. “If properly managed, rising oil prices can strengthen our economy. If not, the gains will be eroded by inflation and economic hardship,” he warned.

NECA’s intervention highlights the urgent need for coordinated action between government, industry, and stakeholders to protect businesses, support households, and maintain economic stability amid a volatile energy landscape.