• Tuesday, May 28, 2024
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Manufacturers on receiving end as Nigerians pay more for diesel, petrol

Avoiding lower profits, transporters push rising diesel cost to consumers

Manufacturers are hard hit by rising energy prices as data released last Wednesday show that consumers paid 9.28 percent more for automotive gas oil (diesel) in October as against the September price.
Year-on-year, Nigerian consumers paid 7.85 percent more from October 2016 price, the National Bureau of Statistics (NBS) data show, which is a negative signal for cost of doing business and production in the country.
Manufacturers spent N129.95 billion on energy annually, and have been forced to set up a company to take care of their energy needs due to low or non-supply of energy by DisCos to industrial zones.
“Power takes up 30 to 40 percent of our expenditure. We cannot continue this way. This is way we have set up MAN Power Development Company to take care of different industrial clusters,” Ibrahim Usman, chairman of MAN Power Development Company Limited, told BusinessDay.

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Already, MAN Development Company Limited has signed an agreement with Tower Energy Solution & Systems Limited for the supply of six to 10 megawatts (MW) of electricity to Henry Carr Industrial Cluster in Ikeja, Lagos.
It has also agreed with Negris Group for the supply of up to 80 MW of electricity to Odogunyan in Ikorodu industrial cluster.
It is also talking with solar power supply firms in the northern Nigeria, where there is limited gas supply to enable clusters in Kaduna, Kano and other parts of the north to have incremental power at cheaper rates. Similarly, a negotiation is on the pipeline with Sahara Energy, Geogrid LighTec Limited and other companies for the supply of power to industrial clusters, according to Usman.

READ ALSO:Explainer: Why has the pump price of diesel remained same despite oil crash?

Nigerian manufacturers self-generate 13,223 megawatts, according to a survey conducted by Adeola Adenikinju, professor of economics at University of Ibadan, which was funded by the European Union and German government.

“The importance of power to manufacturers cannot be overemphasised. For you to do any production, you need to run your plant and those plants need energy, which takes about 40 percent of our production cost and that is not good for our business, especially when you have to compete with imported products. Therefore everything we can, we must do to ensure we bring our costs down,” Reginald Odia, CEO of Bennett Industries, told BusinessDay.

READ ALSO:As motorists groan, PPPRA makes N30.5bn from petrol it does not sell
Data from NBS show that diesel price was N201.96 in October 2017 as against N184.80 in September 2017, data released on Wednesday by the National Bureau of Statistics (NBS) show.
The price of premium motor spirit (petrol) averaged N146, rising 1 percent in October from N144.5 percent in September. It also signifies 0.1 percent slight rise year-on-year, from N145.9 percent in October 2016.
Jigawa, Zamfara and Adamawa states recorded highest average diesel prices in October, with month-on-month prices rising 20.65 percent, 10.53 percent and 24.29 percent respectively.
On y-on-y basis, the three states posted price hikes of 17.10 percent, 10.53 percent and 24.29 percent respectively.
Cross River, Delta and Borno recorded lowest average prices in October with y-on-y numbers standing at 2.71 percent, 1.24 percent and -1.20 percent. Month-on-month prices of these three states stood at 1.59 percent, 3.20 percent and -0.45 percent.
“States with the highest average price of diesel were Jigawa (N222.08) Zamfara (N218.75) and Adamawa (N217.50),” the NBS data say.
“States with the lowest average price of diesel were Cross River (N190.29), Delta (N190.06) and Borno (N189.69).”