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Diesel gulps 80% of manufacturers’ profits, says MAN

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Manufacturers have decried the high cost of automotive gas oil (AGO), also called diesel, which is used in generating power for their operations, noting that product takes about 80 percent of their profits.

Segun Ajayi-Kadir, speaking on the plight of manufacturers against the backdrop of rising prices of their products, the Director General of MAN, stated that manufacturers should not be blamed for increasing prices of products, considering their high cost of production.

However, a little of relief may have come the way of the manufacturers due to the recent crash of the price of diesel by 29.4 percent by Dangote Refinery.

The refinery now supplies the product at a substantially reduced price of N1,200 per litre, representing a 29.4 percent reduction from the past market price of about N1,700 per litre.

Ajayi-Kadir, on the surge in energy cost, said: “We have at different fora informed government and relevant agencies of what to do to bring down these inimical worsening high operating costs in the country. Nigerians should not blame local manufacturers for increasing the cost of goods because they are being confronted with debilitating conditions.

“Do you know that diesel is taking 80 per cent profit of surviving manufacturing firms in Nigeria currently at the rate of about N1,700?

“Which manufacturer can cope with that astronomical price for energy to produce, and you won’t expect him to increase his products in the country?

“Also, look at the new Customs exchange rate, new interest rate, scarcity of foreign exchange (FX), NAFDAC ban, and others. How do you want to cope in production and make a profit?”

Remember that Mr. Aliko Dangote, the President of Dangote Group, recently confirmed that his refinery sells diesel at N1,200, below the market rate of N1,700, adding that the significant cut in the price will have a positive effect on inflation in Nigeria.

Dangote said, “Quite a lot of prices have gone up. When you go to the market, for example, something that we produce locally, like flour, people will charge you more. Why? Because they’re paying very high diesel prices.

“Now, in our refinery, we started selling diesel at about N1,200 instead of N1,700, and I’m sure as we go along, things will continue to improve quite a lot.

“If you look at it now, when you are buying N1,650 or N1,700 for a litre of diesel, and that one has been cut off by almost one-third, you are now paying N1,200 for diesel.”

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