The Natural Oil and Gas Suppliers Association (NOGASA) on Tuesday projected that without the federal government’s intervention, the price of diesel might hit N1500 per litre in the next 14 days. According to the oil marketers, the deregulated product could hike by over 70% if the country does not take drastic measures to avert a bigger diesel crisis in the country.
The sanction of Russian oil (about 3 million barrels a day) by world powers is due to the country’s invasion of Ukraine. This action has created a supply gap in the global demand of the product, resulting in the price’s hike of diesel or aviation fuel to about N800 per liter in Nigeria. Therefore, airline tickets, local commodities, etc which have use of diesel, are inflating their prices to stay profitable.
- Nigerian airlines whose tickets cost N20,000 – N30,000 for a single trip now have a base cost of N50,000. Some filling stations have shut down operations because they have little or no diesel to transport fuel to their depots.
What this means
With threats of heightened diesel prices to N1000 – N1500 per liter on the horizon, the cost of operating airlines, filling stations, local businesses and many more would double. This implies that the cost of goods and services in Nigeria, such as airline tickets, would double from the N50,000 rate (Lagos – Abuja) it currently is. Again, this is despite the heightened inflation rate of foods and commodities as disclosed by the National Bureau of Statistics (NBS) on Wednesday.
Nigeria’s power grid has continued to fail continuously and is no alternative to the use of diesel. Solar systems capable of powering factories and businesses, on the other hand, are expensive to install.
- There is limited supply of forex to Nigerian businesses and individuals that require foreign expertise, equipment and services. Therefore, the black-market players in the country have continued to exploit this gap, resulting in high exchange rates citizens are suffering.
What they are saying
- The National President, NOGASA, Bennett Korie in an interview said if the Nigeria government could reduce the rate of forex spent on PMS imports, other individuals and businesses could afford to import diesel into the country at low prices.
- The Vice President of the Airline Operators of Nigeria (AON), Allen Onyema, said “some airlines outside Nigeria have closed down because of the effects of rising aviation fuel. If these things are not addressed in Nigeria, it can affect the bottom-line of all airlines in Nigeria.”