Manufacturers, bakers and economic experts have warned that the rising price of diesel, which has approached N2,000 per litre in some parts of Nigeria, is putting additional pressure on businesses, workers and consumers, with fears that the development could further worsen production costs, food inflation and the country’s cost-of-living crisis
The Crude Oil Refinery Owners Association of Nigeria (CORAN) also warned that the situation required urgent government intervention, arguing that diesel remained 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 the price of diesel would translate into higher production and transportation costs, while placing additional pressure on manufacturers already struggling with a difficult operating environment
The association said one of the most effective ways of addressing the situation was to strengthen domestic refining capacity and ensure that Nigerian refineries had adequate access to crude oil
CORAN maintained that the country should not treat the Dangote Petroleum Refinery and modular refineries as competitors, stressing that both were 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 operating 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 191 million litres of diesel daily in July.
Combined with output from modular refineries, domestic diesel production could therefore reach between 21 million and 22 million litres per day
The figures, it argued, were significant because reported national diesel consumption stood at about 147 million litres per day in July. Yet, despite the potential domestic supply, Nigeria imported about 244.9 million litres of diesel during the same month.
For CORAN, the figures highlight the urgent need to increase domestic refining and reduce 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 allow Nigerian refineries to operate closer to their installed capacities
But 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.
Onuorah said the increase in diesel prices had substantially raised operating costs, noting that diesel had become one of the major line items in the cost of production
“The situation is crazy,” he said, adding that the price had risen dramatically 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 such an 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 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 been partly cushioned by the fact that flour millers had not significantly increased their prices and, in some instances, had made minor reductions
However, he said those gains had effectively been wiped out by the rising cost of electricity, 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 disconnect between official economic indicators and the realities confronting businesses
He said while government statistics might point to an improvement in some macroeconomic indicators, manufacturers were experiencing 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, he noted, goes beyond manufacturers to workers and households
Onuorah said the cost of transporting workers to and from their places of employment was rising, while employees were having to cope with fixed incomes amid higher food prices, rent, school fees and other household expenses
He illustrated the pressure with the cost of fuelling vehicles According to him, an amount that previously bought enough fuel to last through the week now purchases significantly less diesel.
“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 themselves were under pressure and might be unable to grant wage increases
Real sector can’t survive – Expert
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 the increase in the price of refined petroleum products directly raises their operating costs
“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 negatively affected whenever the prices of petroleum products 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 both local and foreign investors, rather than relying heavily on announcements of investment commitments that may 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 For the government, the challenge is to make domestic refining more effective, improve energy supply and reduce the cost of doing business.
CORAN said the country 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 the alarm over the weakening performance of Nigeria’s industrial sector, saying the sector’s real growth nearly halved from 746 per cent in the second quarter of 2025 to 3.96 per cent in Q2 2026.
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 1063 per cent during the quarter.
“The drop in manufacturing’s contribution to GDP from 957 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.