Worry over economy as diesel price hits N1,000/ litre

Worry over economy as diesel price hits N1,000/ litre

Automotive Gas Oil popularly called diesel is currently being sold in parts of Nigeria including Lagos at N1,000 per litre, a new survey across many filling stations has shown.

Another report puts the pump price range of diesel at N1,150 per litre in places in the South-East and northern parts of the country.

This is causing panic among users of the petroleum product and other stakeholders as the situation is capable of further crippling the nation’s economy.

The new pump prices of diesel show a sharp increase compared to the average price of N844.28 per litre about a week ago.

This sudden increase in price is said to have begun to offset the haulage transportation.

Already, the Nigerian Association of Road Transport Owners (NARTO) is complaining about the rise. Diesel is being used by their trucks to transport petroleum products to different parts of the country.

The price of diesel rose to N950 per litre in August 2023 mainly due to the imposition of a 7.5 per cent value-added tax (VAT) on the product by the Federal Government.

This tax imposition was further compounded by volatile foreign exchange rates, given the country’s heavy reliance on petroleum product imports.

NARTO recently called on the Federal Government to stop the 7.5 per cent VAT on diesel to avert disruptions in the distribution and supply of petrol.

President of the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), Benneth Korie, also expressed worry about the situation.

Korie said the escalating diesel prices would have debilitating effects not only on the fuel distribution but the entire economy of the country.

The surge in diesel prices in Nigeria stems from a multifaceted interplay of factors, Nairametrics says in a related report.

Recently, Reuters shed light on a significant contributor to this rise: a global shortage of diesel.

Oil refineries globally are grappling with diesel production.

Major oil producers such as Saudi Arabia and Russia have curtailed their production and plan to sustain this reduction until year-end, consequently affecting diesel production, a by-product of crude.

As a result of this, the available diesel has become expensive, adversely affecting Nigerian marketers.

This scarcity is compounded by local challenges such as inadequate road networks leading to accidents and breakdowns of diesel delivery trucks across states.

Nairametrics however reported on Tuesday that the highly anticipated Dangote refinery is set to commence diesel refining operations by October 2023.

This development holds promise for many stakeholders, the report states.