The Manufacturers Association of Nigeria (MAN) says the increase in the price of petrol is inevitable.
The Director-General of MAN, Segun Ajayi-Kadir, stated that regardless of the arguments around subsidy removal and the potential effect on the cost of production and the average Nigerian, the product could not be ‘insulated from the laws of demand and supply.
Ajayi-Kadir spoke to newsmen against the submission of the Governor’s Forum to increase the pump price to N385.
He said, “The rise in the price of crude oil should signal the inevitable increase in the landing cost of Premium Motor Spirit in the country, more so that we are saddled with the embarrassment of our refineries operating far below capacity.
“In addition, the government has consistently maintained that it is moving away from the infamous regime of fuel subsidy.”
“We also have private sector players as oil marketers importing the fuel with the need to recover their costs and make a profit. Considerably, it is inevitable that the pump price of PMS will increase,” he added.
On the economic and social implications of an increase to N385 as suggested by the governors, Ajayi-Kadir said that there was no doubt that it would have negative implications for the country.
He said the country was already contending with serious security challenges and the fragile economy may be unable to absorb such a hike in utility product.
The MAN boss said, “The increase in the cost of transportation and the effect on other costs that will accompany a more than 100 percent increase will erode the disposable income of the average Nigerian, especially now that the meagre minimum wage is still debated in most states.
“It is a matter of concern that we may be faced with fuel-induced inflation. Manufacturers have not reconciled the increase in the cost of electricity that has not been accompanied by appreciable improvement in supply.
“Our bottom-line will be further eroded by the heavy cost the increase portends as we are forced to generate our electricity for long hours due to poor supply inadequacy.
“The small and medium scale industries will be particularly impacted as they use PMS to power their machines.”
He said if the FG decided to consent to the governors, a removal in subsidy and increase in the price of crude oil would increase the government’s revenue substantially.
Therefore, it should apply the surplus to mitigate the negative impact of the increase to promote economic growth, productivity, job creation and increased investments.