MAN Report: Diesel Expenses Eat Up 80% of Manufacturers’ Profits
Manufacturers are grappling with the exorbitant cost of automotive gas oil (AGO), commonly known as diesel, which constitutes a significant portion of their operational expenses and devours approximately 80 percent of their profits. Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), emphasized the dire circumstances faced by manufacturers due to soaring production costs, urging understanding from consumers regarding inevitable price adjustments.
However, a ray of hope has emerged for manufacturers with the recent plummet in diesel prices by 29.4 percent courtesy of Dangote Refinery. The refinery now supplies diesel at a markedly reduced rate of N1,200 per liter, a substantial drop from the previous market price of about N1,700 per liter.
Addressing the issue of high energy costs, Ajayi-Kadir highlighted the strain imposed on manufacturers, stressing that diesel expenses alone pose a formidable challenge to the profitability of manufacturing firms in Nigeria. He underscored the cascading effect of exorbitant energy prices on product pricing, asserting that manufacturers must adjust prices to offset operational costs.
Alhaji Aliko Dangote, President of the Dangote Group, corroborated the significance of the refinery’s diesel price reduction in alleviating inflationary pressures. Dangote emphasized the correlation between diesel prices and consumer goods costs, noting that lower diesel costs would positively impact pricing dynamics across various sectors. He affirmed the refinery’s commitment to sustaining competitive diesel prices, fostering economic stability and consumer affordability.
In light of these developments, stakeholders anticipate a mitigated burden on manufacturers as diesel costs decrease, paving the way for improved production efficiencies and potentially stabilized consumer prices. The concerted efforts of industry players and initiatives such as Dangote Refinery’s diesel price reduction offer a glimmer of optimism amidst the prevailing economic challenges.
