• Tuesday, April 16, 2024
businessday logo


Diesel price put Abuja’s business revenues under strain


Soaring diesel prices in Abuja are putting a strain on business revenues, forcing some companies to make tough decisions.

The unreliable power supply from the national grid has forced companies across Nigeria to rely heavily on diesel-powered generators to keep their operations running.

The high cost of diesel, a key fuel for generators that provide backup power during frequent outages, is eating into profits. Businesses are having to choose between absorbing the increased expenses, passing them on to consumers through higher prices, or reducing operating hours.

Many businesses in Abuja rely on generators to keep their lights on and equipment running during power cuts. With the price of diesel rising significantly, some are struggling to maintain their usual operations.

Restaurateurs, manufacturers, and retailers are among those most affected by the surge in diesel prices. Some businesses are reporting a decline in sales as customers cut back on spending due to rising costs.

According to Paul Ojo, the assistant general manager at the Hilltop guesthouse in Lugbe, Abuja told BusinessDay that the high cost of diesel has almost doubled the monthly expenses of the company.

He explained that the company consumes as much as 1,000 litres of diesel in a month, adding that at the recent price of N1,600, it spends N1.5 million on diesel alone.

“What we are going through now is quite challenging for us. Our cost of operation has risen greatly and we have not been able to pay our staff the complete salaries for the past 2 months.

“We usually buy diesel at the beginning of every month, and that is 1,000 litres, but when we did that calculation with our suppliers recently it was well over N1.5 million, which is almost the total amount of our monthly expenses before this new government came on board.”

Paul further said that it is becoming difficult to stay in Business, noting that the 15-room guest house currently has 18 staff, whose total salaries monthly were N950,000.

“The cost of running this business is getting high by the day, we have had to increase the rates of our rooms too, but our revenue is low compared to our expenses and this diesel is a major factor driving the high expenditures.

“The poor power supply is also another factor driving this cost. If we were having adequate power supply, we would not have the need to spend so much on diesel, but we just have to get this diesel because we cannot leave our clients in darkness and the weather these days is quite hot,” he said.

Ojo’s story is far from unique. Across Abuja, businesses of all sizes are feeling the pinch.

John Okafor, owner of “Jollof Haven,” a popular restaurant in Abuja, Nigeria, is staring at a mountain of troubles. The recent surge in diesel prices has thrown his business into a tailspin.

“Our diesel cost used to be around less than N100,000,” Okafor explained, wiping his brow with a damp cloth. “Now, it’s almost N600,000. We rely on generators for most of the day, and this price hike is killing our profits.”

Experts said the situation highlights the urgent need for a solution to Nigeria’s power woes.

Nigeria is currently suffering from low power supply because many gas suppliers have reduced, while others stopped supplying the commodity to power-generating companies due to the indebtedness of the Gencos to gas-producing firms.

Adebayo Adelabu, minister of power, recently revealed that the crash in power generation and attendant poor supply since January was because gas suppliers stopped supplying gas for the generation of electricity due to the indebtedness of the sector to gas producers.

Nigeria gets more than 70 per cent of its electricity from thermal power plants that run on gas. The remaining amount of electricity comes from hydropower-generating plants.