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Fuel Price Hike: Business Operators Panic, Fear Shutdown, Job Losses

todayJuly 20, 2023 17

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Members of the organised private sector, on Wednesday, expressed fear over the possible shutdown of businesses and job losses following the hike in the pump price of Premium Motor Spirit, popularly called petrol, by the Nigerian National Petroleum Corporation Limited and fuel marketers.

On Tuesday, the NNPCL and other oil marketers raised the price of petrol from about N537/litre to between N617 and N630/litre, a development that triggered widespread anger across the country.

Commenting on the matter, the President, Manufacturers Association of Nigeria, Francis Meshioye, said the unpredictability of fuel price hikes would take a serious toll on manufacturers who already had to readjust budgets to factor in the added costs caused by the removal of fuel subsidy.

He said the increase in fuel price had already raised the cost of logistics, which would be compounded by the latest hike.

He stated that given the trend, there were fears among manufacturers that this might not be the final increase and urged the government to develop a culture of engaging key stakeholders before decisions with far-reaching consequences such as this, were taken.

“When fuel subsidy was removed, most people were of the opinion that the change that would occur was going to be a one-off change. If there was going to be any change, we expected little, not a skyrocketing one.

“The signal this gives to the business community is that – are we sure this is the final increase? Some of our members have tried to make some readjustments. This will make nonsense of the budget that we have done. We have said it severally, when it is difficult for you to operate, what happens next?

“If people are unable to come to work and you have to increase prices for consumers, what will happen? And where is the purchasing capability of the consumer to really purchase?” Meshioye stated.

Also speaking, the Deputy President, Lagos Chamber of Commerce and Industry, Gabriel Idahosa, said the increase in petrol price would usher in severe hardship for businesses, especially in the near-term.

Idahosa said, “In the near term, there will be a lot of hardship. A lot of small businesses will crumble completely. There will be a drop in production capacity. How fast we can get out of it is what the conversation is about now.”

On his part, the President, Association of Small Business Owners of Nigeria, Femi Egbesola, expressed worry that more businesses would collapse due to the increased hardship that would characterise the operating environment.

According to him, increasing the pump price of petrol at a time small businesses were fighting for their lives as result of the recent removal of fuel subsidy was a “sledge hammer” that would annihilate many SMEs.

Egbesola said, “It is a sledgehammer on micro and small businesses. I just wonder how we will survive. I must tell you I am confused. The economy has been in a basket, but this is suicidal. I foresee quite a lot of businesses going under. I don’t see how micro and small businesses can survive this. Many will go down.”

Also speaking, the National Vice President, Nigerian Association of Small Scale Industrialists, Segun Kuti-George, said the development would put further strain on businesses that were already grappling with increased costs associated with the government’s recent economic reforms.

He said, “It will bring additional burden on manufacturers who have to contend with the creation of alternative sources of energy to run their businesses. The only fearful thing for me is that our own case as a country does not obey economic theories. It doesn’t respond to market forces.

“It should not be an upswing all the time. If the price of crude in the international market comes down, it is expected that the pump price should also come down. But whether that will happen in Nigeria is a different ball game because whatever goes up, stays there.”

In the same vein, the National Vice Chairman, Nigeria Association of Small and Medium Enterprises, Solomon Aderoju, said more businesses would fold operations in light of the unbearable costs, which has been worsened by the increase in fuel price.

Aderoju said, “It will increase the cost of operations. Many SMEs are packing up already. MPR is 18.5. The rate of inflation is 22.79 per cent. So, no SME can thrive under this environment, with these kinds of government policies. More are still going to close down. I bought fuel for N14,000 today. It cannot last me more than a day or two. It will affect us tremendously. It is quite unfortunate.”


Written by: Kevin Nwabueze

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