There are more woes ahead for the Nigerian economy as manufacturers say surging diesel prices will force them to cut jobs, curb operations and raise prices.
The cost of the fuel has more than doubled this month to as much as 800 naira ($1.92) per liter in Africa’s biggest economy, according to Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria.
That compares with an average of 312 naira in February and 288 naira in January, National Bureau of Statistics data shows.
Power normally accounts for as much as 40% 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.
“Having a major cost element increasing by more than 100% is a cause of trouble” that will lead to job losses, reduced shifts and higher prices for consumers, Ajayi-Kadir said in a March 15 interview with Lagos-based television.
Manufacturing accounts for about 13% 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.
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At the same time, about 40% 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 Co. 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.