The Manufacturers Association of Nigeria, (MAN), has raised concerns that the proposed fuel subsidy removal by the Federal Government will lead to inflation occasioned by an increase in production costs which may translate to higher prices of goods.
MAN however agreed to the need for deregulation to enable competition and efficiency in the downstream oil sector, and ensure the adequacy of supply, adding that the government must take necessary measures to address the possible fallouts.
The association’s Director-General, Segun Ajayi-Kadir, stated the position of the manufacturers in a chat with newsmen yesterday.
His words: It is a matter of concern that we may be faced with fuel-induced inflation.
“Manufacturers are yet to come to terms with the astronomical increase in the cost of electricity; not to mention that the unnerving increase is not accompanied with appreciable improvement in supply.
Our bottom-line will be further eroded by the heavy cost the potential increase portends as we are forced to generate our own 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. The logistics chain, especially the delivery of finished products to wholesalers and retailers, will witness increased costs, which may translate to higher prices of goods.
The increase in the cost of transportation (and the multiplier effect on other costs) that will accompany the move will erode the disposable income of the average Nigerian, especially with the minimum wage at N30,000 and still in contention in most states of the federation.
Ajayi-Kadir further stated that, MANs position has always been that, in order for us to have competition and efficiency in the sector and adequacy of supply, we need to deregulate.
The MAN DG, however, noted with comfort the rising price of oil in the international market.
We should apply the surplus to directly countermand the negative impact of the potential rise in the price of fuel. It should promote inclusive economic growth; it should fund productivity, job creation and increased investments, he added.
MAN also noted the mitigating measures initiated by the government, starting with the N5,000 monthly transport grant to 40 million most vulnerable citizens.
