The foreign exchange crisis in Nigeria and the recent implementation of a 7.5% Value Added Tax (VAT) on Automotive Gas Oil (diesel) have significantly increased the cost of diesel, reaching between N900 and N950 per litre in many states.
This surge in costs is impacting various sectors, including manufacturing, and leading to concerns about factory closures and job losses. The Natural Oil and Gas Suppliers Association of Nigeria has highlighted the challenges faced by fuel marketers due to the inability to access US dollars for diesel importation.
The introduction of VAT on diesel further compounded the issue. The association is urging the government to address the dollar scarcity and prioritize efforts to restore Nigeria’s refineries to operation to reduce dependency on imports.
Opinion:
The escalation in diesel costs presents a significant challenge to various industries, especially manufacturing, as higher energy costs threaten their viability. The government’s initiatives, such as the implementation of VAT on diesel, could exacerbate the economic difficulties faced by businesses already grappling with inflation and supply chain disruptions.
To prevent potential factory closures and job losses, it’s crucial for the government to adopt a holistic approach. This could involve addressing the forex crisis, supporting local refineries, and creating a conducive environment for businesses to thrive. Collaborative efforts between stakeholders, including industry associations, policymakers, and regulatory bodies, are needed to navigate these challenges and ensure the sustainability of Nigeria’s economy.