Fuel Price Hike to Deepen Manufacturing Crisis, Warns MAN
The Manufacturers Association of Nigeria (MAN) has issued a stark warning that the recent surge in the price of premium motor spirit (PMS) from ₦568 to ₦855 per litre will exacerbate the already critical cost challenges facing the country’s real sector. This follows a price review by the Nigerian National Petroleum Company Limited (NNPCL), amid widespread fuel scarcity.
In a statement, MAN highlighted the damaging impact this price increase would have on Nigeria’s manufacturing industry, which has been battling rising operational costs. Segun Ajayi-Kadir, the Director General of MAN, noted that the petrol price hike would inevitably trigger higher prices across a range of commodities, putting further strain on consumers with already dwindling disposable incomes.
Ajayi-Kadir acknowledged the unavoidable nature of the price hike, citing the global increase in crude oil prices and Nigeria’s dependency on imported fuel, driven by the country’s non-functional refineries. “The increase in the cost of crude oil will have a direct impact on the cost of importing fuel into Nigeria, and it was expected that the NNPC would eventually adjust domestic prices,” he said. He further pointed out that the removal of fuel subsidies made this rise inevitable.
The depreciating value of the naira, he added, would compound the difficulties faced by manufacturers. As Nigerians spend more of their income on transportation and energy, Ajayi-Kadirpredicted a decline in demand for non-essential goods, contributing to further inflationary pressures and worsening household budgets.
“The manufacturing sector is particularly vulnerable to these developments,” he said, highlighting how higher production and logistics costs could lead to unsold inventories and lower capacity utilisation, risking a downturn in the sector’s performance. Ajayi-Kadir warned that some manufacturers might be forced to scale down or shut operations altogether if they are unable to pass the added costs on to consumers.
Small and medium-sized enterprises (SMEs) are expected to bear the brunt of the hike, with Ajayi-Kadir noting that these businesses often operate on tight margins. “Businesses may need to adjust their pricing strategies, which could lead to reduced profit margins if consumer demand weakens,” he added.
MAN’s cautionary message underscores the growing economic strain on Nigeria’s manufacturing industry as it grapples with the challenges posed by rising energy costs, inflation, and dwindling consumer spending power.
