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SME Guide

Diesel Prices Surpass N1000 Per Litre in Nigeria Amidst Global Supply Constraints

The recent surge in diesel prices in Nigeria exceeding N1000 per litre has raised concerns within the country’s transport and manufacturing sectors.

Benneth Korie, President of the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), highlighted the difficulties faced by suppliers in procuring and distributing diesel given limited loan accessibility. This spike has led to increased haulage costs nationwide.

Industry experts cite the global diesel shortage as a primary catalyst for this price growth within Nigeria. Constrained refining capacity worldwide following pandemic-induced disruptions has tightened supply amidst recovering demand.

Major producers like Saudi Arabia and Russia have intentionally scaled back output through year-end 2023, impacting diesel yields and availability. Consequently, global diesel prices have risen, passing costs to Nigerian importers.

Domestically, factors like inadequate road infrastructure causing delivery delays have also contributed. The recent 7.5% VAT on diesel imposed by the Federal Government coupled with volatile FOREX rates given Nigeria’s import dependence have added to pricing pressures.

However, the country’s energy outlook shows promise. The Dangote Refinery is slated to begin diesel production by October 2023, which could alleviate supply constraints when operational. Though global headwinds persist, growth in domestic refining capacity could cushion the impacts of external volatility.


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