Manufacturers, bakers and economic experts have raised concerns over the rising price of diesel, which has approached N2,000 per litre in some parts of Nigeria, warning that the development is increasing production costs and putting additional pressure on businesses, workers and consumers.
The stakeholders said the rising cost of diesel could further worsen food inflation and Nigeria’s cost-of-living crisis, particularly as many businesses rely on diesel-powered generators and other equipment to sustain operations amid unreliable electricity supply.
The Crude Oil Refinery Owners Association of Nigeria, CORAN, also called for urgent government intervention, stressing that diesel remains a critical source of energy for factories, farms, transportation companies, telecommunications firms and other businesses.
In a statement by its Publicity Secretary, Eche Idoko, CORAN warned that sustained increases in diesel prices would translate into higher production and transportation costs, further putting pressure on manufacturers already operating in a challenging business environment.
The association said strengthening domestic refining capacity and ensuring that Nigerian refineries have adequate access to crude oil would be among the most effective ways to address the situation.
CORAN maintained that the Dangote Petroleum Refinery and modular refineries should not be treated as competitors, arguing that both are local assets capable of helping Nigeria reduce its dependence on imported petroleum products.
According to the association, Nigeria’s existing modular refineries have an estimated installed capacity of about 35,000 barrels per day. If they operate at full capacity, they could collectively produce between 2.2 million and 2.8 million litres of diesel daily, depending on their configurations and product yields.
CORAN added that the Dangote refinery reportedly produced about 19.1 million litres of diesel daily in July.
Combined with output from modular refineries, the association said domestic diesel production could therefore reach between 21 million and 22 million litres per day.
The figures are significant, it argued, because reported national diesel consumption stood at about 14.7 million litres per day in July. Despite the potential domestic supply, however, Nigeria imported about 244.9 million litres of diesel during the same month.
For CORAN, the figures demonstrate the urgent need to expand domestic refining and reduce the country’s dependence on imports.
The association therefore called on the Presidential Committee on Naira-for-Crude to increase and guarantee adequate crude supply to the Dangote refinery while extending the naira-for-crude arrangement to modular refineries.
It also urged the Federal Government to establish commercially sustainable crude supply arrangements that would enable Nigerian refineries to operate closer to their installed capacities. For manufacturers, the immediate impact of expensive diesel is already being felt across their operations.
President of the Premium Bakers’ Association of Nigeria, Engr. Emmanuel Onuorah, described the situation as extremely difficult for businesses, particularly manufacturers that depend heavily on diesel to power their operations.
Also Read: CORAN urges FG to cut fuel imports, boost local refining
Onuorah said the increase in diesel prices had substantially raised operating costs, with diesel becoming one of the major components of production expenses.
“The situation is crazy,” he said, adding that the price had risen sharply compared with the same period last year.
According to him, diesel was around N800 per litre at about the same period last year but had now risen to between N1,800 and N1,900, depending on the source and location.
He said the increase meant that a key component of production costs could rise by as much as 150 per cent, making it increasingly difficult for businesses to determine their profitability.
“For us, we don’t even want to look. I don’t even look at the books again. I just produce and sell. I’m not thinking of profitability; I’m thinking of, let us just remain afloat in the bakery,” Onuorah said.
He said the baking industry had received some relief because flour millers had not significantly increased their prices and, in some cases, had made minor reductions.
However, Onuorah said those gains had effectively been wiped out by rising electricity costs, power outages, investment in alternative energy and the increasing price of diesel.
“It’s a terrible situation we are finding ourselves in. I don’t even mind. I just pity every manufacturer in Nigeria, no matter what you are producing,” he said.
Onuorah also questioned the gap between official economic indicators and the realities confronting businesses.
He said while government statistics might show improvement in some macroeconomic indicators, manufacturers were dealing with a very different reality because of the high cost of energy, transportation and other inputs.
He further warned that developments in the international oil market could worsen the situation, particularly if instability in the Middle East affects global energy supplies.
The impact of expensive diesel, according to Onuorah, extends beyond manufacturers to workers and households.
He said the cost of transporting workers to and from their places of employment was increasing, while employees were having to cope with largely fixed incomes amid rising food prices, rent, school fees and other household expenses.
He illustrated the pressure through the rising cost of fueling vehicles, saying money that previously bought enough fuel to last through the week now purchases significantly less.
“A worker that has a fixed income and needs to go to work, the man wants to buy bread, he wants to buy a meal, he wants to pay school fees, he wants to pay inflated rent. How can that man survive?” he asked.
He said workers were among those most vulnerable because their incomes were largely fixed, while employers were also under pressure and might be unable to increase wages.
Economic expert Dr. Marcel Okeke agreed that the real sector would continue to bear the brunt of rising energy costs.
He said manufacturers were particularly vulnerable because increases in refined petroleum product prices directly raise their operating expenses.
“The real sector, which is manufacturing, will continue to have the short end of the whole deal,” Okeke said.
According to him, the problem extends beyond factories because Nigeria remains heavily dependent on generators for electricity.
He described Nigeria as a “generator economy”, arguing that households, businesses and institutions are all affected whenever petroleum product prices rise.
Okeke said the high cost of doing business was also undermining Nigeria’s competitiveness and discouraging investment.
He argued that the country needed to create an environment capable of attracting and retaining local and foreign investors, rather than relying heavily on announcements of investment commitments that might not translate into actual capital inflows.
He cited the difference between announced investment deals and actual foreign direct investment as an indication of the challenges facing the economy.
According to him, much of the capital entering the country is in the form of foreign portfolio investment, which can leave quickly when investors’ expectations change.
The rising cost of diesel therefore presents a challenge beyond the immediate price of fuel. It threatens to increase the cost of producing goods, transporting them to markets and running businesses, with the resulting costs ultimately passed on to consumers.
For manufacturers, the immediate priority is survival, while the government faces pressure to make domestic refining more effective, improve energy supply and reduce the cost of doing business.
CORAN said Nigeria must move beyond rhetoric and ensure that Nigerian crude is increasingly used to power Nigerian industry.
“Energy-sector reforms must wear a human face,” the association said, stressing that Nigeria produces crude oil and Nigerians should begin to feel the benefits of being an oil-producing nation.
The Manufacturers Association of Nigeria, MAN, recently raised concerns over the weakening performance of the country’s industrial sector, saying real industrial growth nearly halved from 7.46 per cent in the second quarter of 2025 to 3.96 per cent in Q2 2026.
MAN Director-General, Segun Ajayi-Kadir, said the sharp deterioration in industrial performance was driven mainly by electricity, gas, steam and air-conditioning supply, which contracted by 10.63 per cent during the quarter.
“The drop in manufacturing’s contribution to GDP from 9.57 per cent to 7.72 per cent in a single quarter highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers,” he said.
Daily Trust
