With the price of crude oil projected to hit $200 a barrel at the international market, following the escalating America-Israel Iran war, members of the Organised Private Sector (OPS), have raised the alarm that the conflict is already pushing up cost of production in the manufacturing sector, amid the soaring prices of petroleum products, especially diesel, otherwise known as Automotive Gas Oil (AGO) in most petrol stations nationwide.
The private sector group comprising the Manufacturers Association of Nigeria (MAN), the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Nigeria Employers’ Consultative Association (NECA), the Nigeria Association of Small and Medium Enterprises (NASME), the Nigeria Association of Small Scale Industrialists (NASSI), the Lagos Chamber of Commerce and Industry (LCCI), the Centre for the Promotion of Private Enterprise (CPPE) and 25 other Employer Federations expressed grave concern over the US-Israeli-Iran war in the Middle East and the threat to the stability of petroleum products prices in Nigeria.
They stated that the country’s industrial sector is already feeling the pains and agony in its production lines, adding that beyond fuel supply, domestic refining generates substantial industrial and economic multiplier effects. The Director-General of MAN, Mr. Segun Ajayi Kadir, in an interview with Saturday Telegraph, explained that the war in the Middle East is resulting in oil price volatility, warning that a continuing rise in AGO prices may result in rising stockpiles in inventory of unsold finished goods in different warehouses nationwide over fears of local manufacturers’ logistics trucks not working optimally.
The MAN DG pointed out that many local manufacturers operating in the country have been overstretched in one way or another over numerous challenges. He stated that an upsurge in the relatively stable AGO prices could be catastrophic to the manufacturing sector, if the US-Israeli-Iran conflict is not quickly resolved, given the key role crude oil plays on the international stage.
Ajayi-Kadir said: “I can categorically tell you that MAN secretariat is already getting on-field assessment reports from its members in the country on the effects of the war on petroleum products’ prices nationwide, especially AGO prices. Reports from our members show that AGO prices are now hovering between N1,800 and N2,000 in Lagos and Abuja, respectively.
While the price in other states of the federation is beyond N2,000. “I can tell you that if something is not done about this war, Nigerians could be seeing the serial multiplier effects on the cost of goods, because the unstable fuel prices are pushing costs upwards in the manufacturing sector. In addition, it can lead to a further rise in stockpiles of unsold finished goods in different warehouses nationwide.
We are appealing to all concerned parties in this Middle East war to sue for peace and stop the bombings.” In his own reaction, the Chief Executive Officer, CPPE, Dr. Muda Yusuf, affirmed that refineries produce a wide range of intermediate products that serve as feedstock for industries such as petrochemicals, fertilizers, plastics, pharmaceuticals, paints, and other chemical-based manufacturing sectors, adding that these linkages help strengthen Nigeria’s industrial ecosystem and promote deeper value addition within the economy.
He said the refining industry also stimulates economic activity across the petroleum value chain, including storage, transportation, distribution, marketing, and retail operations, thereby creating jobs and supporting broader economic growth.
An investigation by Saturday Telegraph across notable blue chips firms, including Flour Mills Plc, Nigerian Bottling Company (NBC) Limited, Unilever Nigeria, Dangote Sugar, PZ Nigeria, May & Baker Plc, WAMCO, among others in the country’s manufacturing industry showed that the spiral effects of rising AGO prices are being felt in their logistics arms with only skeletal operations being carried out by their trucks meant to go to the hinterlands and distant places.
