With the high costs of diesel, fuel and epileptic electricity supply, it has become extremely difficult to run a business profitably in Nigeria.
Vanguard checks nationwide showed a dire situation.
Financial institutions, small-scale business operators, including transporters, hoteliers, and mechanics in the six states of the South-South zone have complained about the high price of Automotive Gas Oil, AGO, popularly known as diesel, which has forced many to streamline, downsize and made others shut operations.
Amid the complaints, the Federal Government has assured that the power supply will get better in a short while because it has taken measures to stabilize the sector.
Minister of Information and Culture, Alhaji Lai Mohammed, in a telephone chat with Vanguard, noted that pipeline vandalism and oil theft over the years have harmed the stable electricity supply, adding that the crime is now being tackled. On the high cost of diesel, the minister said diesel had been deregulated before the President Muhammadu Buhari administration came on board.
According to him, the diesel crisis is a reflection of what is happening all over the world on account of the Russia/ Ukraine war.
1,000% hike in C’River
In Cross River State, banks in Obudu, in the northern senatorial district, which used to have a huge concentration of financial institutions, have suspended operations because of the high running cost. Bankers, hoteliers, and tipper drivers, among others, complained that the sudden increase in diesel price by as much as 1,000 per cent has made quality service delivery impossible.
A banker, who did not want his name in print, muttered to Vanguard: “Before now, banks used to open at 8 am and close by 4 pm but since last year, many of the banks started closing by 2 pm because they cannot afford to bear the high cost.
“This made a lot of customers adjust to that time and it has become a norm. We used to buy diesel at N200, it later moved to N250, then N400, it is now N800. It is no longer cost-effective for banks. We had to streamline operations to stay in business and deliver quality service.”
Manager of Success Villa Luxury Hotel, Otop Abasi, Calabar, Mr Itoro Akpan, said: “We have maintained the quality of our unique selling point which is a top-notch luxury brand but the price of diesel is extremely challenging.”
“We have tried not to downsize so far because if we do, a lot of young people will be out on the streets. We want to appeal to the Federal Government to speed up efforts to make power much more stable to revive businesses.”
Tipper owner, Bright Effiong, quipped: “We have to make the total calculation before leaving the tipper park for any job, to avoid incurring loss and this you must get over 70 per cent to 80 per cent, reduces prospects and slows down business.”
Businesses crash in Edo
In Benin City, Edo State, a graduate of the University of Benin, UNIBEN, Mrs. Joyce Bamiekumo, who supports her family income with a micro-financed pepper/tomato grinding business powered with a diesel generator, complained: “The price of a litre of diesel was N350–N450 before and I used to charge N100 depending on the quantity. With the price of N900 per litre, I now charge N300 for the least quantity but there is no patronage anymore.”
A bus driver, Monday Oghuza, whined: “I use a diesel bus. Every day, I spend over N12,000 on diesel. I make between N15,000-N22,000. Of this amount, I pay for government daily tickets, touts, ESMA and other charges to allow me to work. I pay the owner of the bus his daily agreed amount. Previously, I used to take about N5,000 home daily but with the increase in diesel, I can hardly get something with which to feed my family. I appeal to the government to address this issue if we are to survive.”
Haulage truck owner, Patrick Ogienmwonyi, said: “My truck runs on diesel and in the last few months, it has been very difficult. Initially, we were buying diesel and then trying to increase the cost of transportation, but as it is right now, we can no longer increase it. The situation has completely grounded my haulage business.”
Kpofire diesel to the rescue in Bayelsa
In Bayelsa, Vanguard learned that but for diesel from oil bunkering, popularly known as kpofire, in the predominantly riverine state, most business outfits depending on diesel would have closed shop.
While the product is being sold between N750 and N900 per litre at petrol stations, a 25- litre jerry can directly from the Kpofire camps is N7,000. Others retail at N9,000 to users.
Findings also revealed that most diesel users mix diesel bought from Kpofire operators and one from petrol stations to save cost.
A laundry shop owner, Mr Friday Sini, who uses a diesel-powered generator to run his business, lamented: “The high cost of diesel has really affected my business. I went for a diesel generator to save cost but the sharp and daily increase in the pump price of diesel means that I have to adjust.”
Printing Press Operator and Publisher of Niger Delta Herald newspaper, Francis Dufugha, bemoaned: “It has been a trying moment for those of us using diesel generators to run our businesses. The rise in the product’s price from N200-N800 and sometimes N1000 per litre is alarming. We are running at a loss. I usually print my paper every week but have now resorted to twice monthly. The cost is choking businesses.”
To Haulage truck driver, Mr Aondofa Tyvakasa: “We are barely surviving because of the high cost of diesel. What we do is mix the diesel we buy from a filling station with that from illegal refinery operators. Without this, we cannot meet up. The Kpofire diesel direct from the source is N7,000 for a 25-litre jerry can while some retailers sell the same for N9,000. So, we mix the diesel we buy from the filling station and the Kpofire diesel.”
Diesel engine mechanic complains
A mechanic, who specializes in diesel-powered vehicles, Wasiu Ade, said: “There has been a lull in business lately. Most of our customers have stopped using their diesel-powered cars because of the astronomical increase in the price of diesel.”
“Unlike haulage trucks that could take the mixture of diesel from filling stations and illegal bunkering fuel (diesel), most car owners like Sports Utility Vehicles are wary of taking such risk.
“Many have limited the use of their cars, while others have outrightly stopped theirs so we have little to do now. So, how to feed my family now is a major challenge, not to mention meeting up my children’s school expenses.”
Users dump diesel generators in Delta
In Delta, many families using diesel-powered generators have abandoned them because of the sky-scrapping cost of diesel.
A manager of a hotel on Airport Road in Warri said they reverted to petrol generators within the week because of the high cost of diesel.
Entrepreneur and politician, Chief Sunny Onuesoke, told Vanguard: “I would prefer the government subsidizes diesel instead of petrol because diesel takes care of 75 per cent of the production, manufacturing, and construction sectors.
“From all indications, you know that the above sectors are the economic pillars of any nation in the world. If this process of the high cost of diesel continues, Nigeria will collapse soon.”
“Something needs to be done urgently to arrest the situation because of the high level of retrenchment currently going on in all the sectors of the economy.
The economy is collapsing. I have reduced the consumption of diesel in my business premises and home. I depend mainly on solar energy to reduce running costs as diesel sells for N800 per litre in my area.”
Businesses dying fast, Enugu entrepreneurs lament
Business owners operating in the South-East zoning are also lamenting the rising costs of petrol and diesel which they use in running their businesses in view of the poor power supply from EEDC, the disco serving the zone.
They said they are no longer making any profit from their businesses but trying to service their clients and feed their families. Diesel sells for between N780 and N920 per litre in many filling stations in the zone, while petrol sells for between N 185 and N190.
This is affecting businesses. Even banks are not left out as they sometimes switch off their generators in the middle of the banking period to save costs. Also, most hotels in the state ration their power supply even with lodgers in their rooms
Coping is very difficult —businessmen
In Anambra State, an industrialist, Chief Emeka Ikedi, whose company manufactures plastics, said he had to lay off nearly 50 per cent of his staff when the cost of production became so high.
Ikedi said: “When we started operation10 years ago, diesel was sold at about N120 per litre and we could afford to run our generators all day. During that period, we were meeting our customer’s demands and we were improving the welfare of our staff regularly.
“When this problem of deregulation of the price of diesel started, it began to have a negative impact on us and it continued until it got to a situation we could no longer cope with. We had to sack many workers and presently, we don’t operate for more than two hours a day.”
Ikedi wondered how the country could grow industrially without an adequate power supply, adding that once there is an adequate electricity supply, many moribund companies will pick up and generate more employment opportunities for the people.
A manager in one of the big hotels in Awka, Mr. Francis Okoye said they have been losing a lot of customers due to an epileptic power supply.
“We have four generators and it costs us over N5 million to power them every week. When we could no longer cope, we started rationing power supply and it affected the inflow of customers. But there is nothing we can do,” he said.
Chief Johnson Okolo, an Onitsha-based small and medium-scale industry owner, and President, the Association of Small and Medium-Scale Enterprises bemoaned the negative impact of the high cost of petroleum products on his business and called for urgent Federal Government intervention to save business owners.
“Many small-scale industrialists in our industrial cluster have folded up their businesses because they can’t withstand the high cost of running their small-scale industries on personally provided power generating sets that use petrol and diesel.
“We were complaining about the epileptic power supply by Enugu Electricity Distribution Company, EEDC, later we finally resorted to using our power generating sets, to run our businesses. The high cost of petrol and diesel has aggravated our problems, thereby causing some of us to close our small factories and resort to other means of survival.
“Osakwa industrial cluster had more than 15,000 small industry operators but today you cannot have up to 4,000 small scale industry owners. Many operators have changed their line of business to buying and selling, while their workers have resorted to commercial bus and tricycle operation business. “Personally, I had over 30 workers in my small-scale industry, but today, I do not have up to 10 workers. The same thing applies to the remaining small-scale business owners here.”
We’re going out of business — Abia NARTO chairman
Chairman of the Nigerian Association of Road Transport Owners, NARTO, in Abia State, Deacon Amaobi Ohaeri, also lamented that many transport owners are going out of business as a result of the high cost of fuel.
He explained that the transport sector has been suffering the same fate as the aviation industry where some airlines have shut down their operation because of the high cost of operation.
On the way forward, he urged the Federal Government to grant licenses to local refineries to boost the availability of petroleum products.
“The problem of high cost of fuel has gotten out of hand as it concerns the transportation business. For the vehicle to be on the road we must fuel it but the high cost of diesel is there and the effect will be passed on to whoever is coming to hire the vehicle.
“It is a problem that we don’t know how to solve. I have been telling my members to be reasonable in hiking their fares but the cost of operation is too high. The high cost of diesel or fuel is there and you talk of the spare parts. The high exchange rate has made spare parts we usually buy for N10, 000 to rise to N90, 000.
“So, it is a big problem with many facets. It is hitting hard on the transporters; it is hitting hard on the hotelier. Just like what is happening in the aviation industry where some airlines have shut down, transport owners are running out of business. It may not be easily noticeable because there are still vehicles on the road, but many transport owners have withdrawn.”
N40,000 spent on diesel daily — Petrol station manager
The manager of EASYON petrol station in Umuahia, Abia State, Chimuanya Ndunwoke, decried the rising cost of diesel and its attendant effect on the station. Speaking with Vanguard, he said that they were spending about N15,000 on diesel daily at the beginning of the year when the product sold for N500 per litre but now they spend about N40,000 daily just to run their generating set. He said that the soaring cost of diesel had also led to a reduction in sales as demand for the product crashed.
Also, a tipper driver popularly known as Tamtam lamented the rising cost of diesel which he said had made them toiling almost for nothing. He said that a trip of sand which sold for N30,000 last year and N35,000 at the beginning of this year now sells for N45,000 in the Umuahia metropolis and more outside the town.
“We buy diesel for N900 per litre and still use diesel to suck sand from the river. The labourers who load the sand have also increased their charges because everything is now on the increase”, he said.
I spend N14,000 on petrol weekly — Fashion designer
A fashion designer based in Owerri, Imo State capital, Mr Emeka Uwakwe lamented that he spends an average of N14,000 weekly on petrol out of about N50,000 he earns within the week. He said the situation is biting as petrol takes half of his weekly income. He recalled that he was spending less than N10,000 before the price of petrol went up earlier this year.
Banks close early, small business owners lament in Osun
The tales of lamentation are also on the lips of business owners in several parts of Osun State. Some banks in the state capital now shut their doors to customers by 3pm contrary to 4pm due to the high cost of diesel.
Commercial motorcyclists in Osogbo, the state capital, are gnashing their teeth over the hike in diesel and petrol prices and scarcity of the product.
Secretary of the union in Olorunda Local Government Area of the state, Azeez Kolawole, said customers are not paying much due to lack of money, yet, filling stations keep increasing prices without any regulation.
“The petrol situation is making life difficult for our members. Residents complain over lack of money and petrol prices are becoming unbearable for us. Some filling stations sell as high as N200 per litre while customers hardly want to part with their money.”
Also, some commercial banks in the system have been shutting their doors to customers around 3 pm due to the high cost of diesel.
A top official of one of the commercial banks said: “Considering that electricity supply is no longer constant, the banks run mostly on diesel, hence, the decision to shut our doors at 3 pm.”
Business owners groan in Ogun
The current hike in petrol and diesel has greatly affected all business activities, including transport fares in Ogun State. A litre of petrol sells for N180 as against N165 it was sold a few months ago, while a litre of diesel is now sold between N780 and N800 per litre.
A commercial driver, Akinade Adedayo, said the current increment in transport fare was due to the increment in the prices of fuel. You know all commercial activities rest on fuel and transport systems. We also take care of our families from anything we realize from our transportation business.
A trader at Kuto market, Mrs Adejoke Salami attributed the high cost of goods and food items to the increase in transport fares.
“Initially, when we go to Lagos to buy goods, I spend between N10,000 and N15,000 on transport, but now with the current situation, I spend between N25,000 and 40,000. The transporters tell us that fuel is too expensive. They too need to take care of their families from what they make.
On intercity fare, Abeokuta to Lagos now costs N1,500 as against N1,000 before the increment in fuel prices.
Also, an investigation by Vanguard revealed that banks in Abeokuta metropolis now close by 2 pm, as against 4 pm. This was necessitated by the high costs of diesel.
Speaking with our Correspondent, a staff member of commercial bank staff, who pleaded anonymity said: “We close by 2 pm these days. This is part of our strategy to cut costs because the cost of running generators is too much. Now, a litre of diesel now costs between N780 and N800.”
In Ondo, it’s hellish to break even nowadays
Like other places, this is not the best time for business owners in Ondo State. Banks, transporters, small scale business owners are groaning sequel to the high cost of petrol and diesel.
Some bank managers in Akure, the Ondo state capital, told Vanguard that they have reduced their staff strength, and opted for contract staff to cut costs. “We have reduced our staff strength to the minimum, all the stuff you see in the bank, fewer than 10 of them are permanent staff, others are contract staff.
“We have also opted for solar to power a few gadgets especially the computers because we cannot afford to buy diesel for between N850 and N900 per litre. It’s killing. We now alternate between running our big generator and the use of solar power. When we’re on solar power, we switch off the air conditioners because the load would be too much for the solar. In fact, it can’t power the air conditioners. That’s why when you enter many of the banks you notice that all the air conditioners are switched off and the place is stuffy. That’s when they’ve switched to solar to power their equipment.”
Some transporters interviewed said “we have no option but to increase transport fares because we can’t run at a loss.
“For example, bus fare from Akure to Ibadan that used to be N2,000 before the latest increase has been hiked to N2,500, while from Akure to Lagos has been increased from N2,550 to N3000.”
A businesswoman, Mrs Ojogo Bulous Florence, CEO, of Sarah Bulous Fashion and Designs Ent Limited, said that “business owners have not found it pleasant at all. It is as bad to the extent that there is a great disincentive to small and medium scale businesses.”
Also speaking, a medical doctor, Dr Thomas- Wilson Ikubese, said: “The rising cost of fuel no doubt will take its toll on the cost of running a business generally, especially in a facility like Sckyé hospital, in Akure, that runs 24hrs exclusively on generators, without using BEDC power supply.
“But because our services are largely humanitarian, running free ante-natal services and free deliveries, including free Caesarian sections, we cannot afford to start charging for these free services that we’ve been rendering since 2004.
“So, while these services remain free, we have to slightly increase the cost of other services so that we can keep afloat and use the income from those to cushion the effect of the rising cost of fuel as we are not getting financial support from any agency.
Hard to survive in Oyo
Many businesses in Ibadan, Oyo State capital are fighting hard to survive the surging diesel prices and the Premium Motor Spirit, PMS, otherwise known as petrol. “
Industry stakeholders said their businesses face threats of collapse daily on account of running costs worsened by the power supply
“I found it impossible to continue using diesel to power my generator due to the size. How many of us can invest in solar? It is very expensive to get a solar panel that will power my freezers and it will cost a lot,” a frozen chicken seller at Bodija, Ibadan, Mrs Adenike Olusola said.
She called on the government to help in finding a solution to the development, saying, the ripple effect of this will worsen the unemployment rate if factories continue to close down operations.
Also, the owner of the metal construction business, located along the University of Ibadan road, Abduljeleel Kewulere, said the business was left with no option but to increase the price of its services to augment diesel costs. He said: “I am finding it difficult to cope. The prices of metals and other materials have gone up significantly because the manufacturers also use diesel to power their heavy-duty machines. What can we do?”
Also, a petrol attendant at Poplat petrol station, Mokola, Ibadan, who asked not to be named, said the prices of petrol now vary between N185 and N200 per litre within the Ibadan metropolis, while diesel sells at N1,000 per litre.
Untold hardship hit business owners, banks in Ekiti
Residents of Ekiti State are not left out of this conundrum that has left many perpetually at the lowest ebb of life, which has affected every strata of society.
Regrettably, the populace is the worst hit as financial institutions, transporters, small-scale business owners, etc, now devise means to stay afloat despite the ridiculous hike in prices of fuel and diesel that is being sold at N185 and N800 respectively.
A visit to one of the first-generation banks in the state capital shows that banks are adjusting their operating time to cushion the impact of the high cost of diesel.
Speaking with our reporter, a banker who spoke on the condition of anonymity, said: “We got a circular from our headquarters sometime in April that banking hours across all locations have been changed. The directive said that transaction hour will now be from 8 am to 3 pm in different branches across the country. “We also have alternative and digital channels which are always available and accessible 24/7 anywhere and anytime to meet our customers’ banking needs.”
Commuters groan as transport fare skyrockets
The surge in diesel prices is also taking a toll on transporters and commuters which has led to an increment in transport fares within and outside the state. A visit to one of the popular motor parks along Old Garage indicates that transporters have increased fares to meet up with their daily targets.
One of the transporters, Kunle Ajayi said: “I’m a driver who takes passengers from Ado-Ekiti to Akure. Due to the cost of fuel, we now charge 1200 instead of 800. We have to pay money for tickets to our union and that also affected the increase.”
Similarly, a 30-minute drive from Ado-Ekiti to neighbouring Ikere has skyrocketed to N250 as against N150. Commercial motorbike operators have also increased their fares in the state capital.
Small businesses ration supply, cutting into work hours
Small Scale Business owners in the state are cutting work hours and rationing supply due to the difficulties in power facilities and transporting both raw materials and finished goods. A respondent, Yinka Olaniyi, who owns a barbing saloon, lamented that the high cost of fuel made him cut hours of operation and also increased the price for each haircut.
He said: “Due to the poor supply of electricity, I have to rely on generators for my business. I usually charge N300 for adults but now it’s N500 while a children’s haircut that was N150 is now N300.”
In the north, the situation is not different.
SMEs shutting down in Kaduna
In Kaduna, small-scale businesses are closing shops at a very fast pace due to the high cost of diesel. Bakeries which rely on diesel to power their generators are running out of business, and those who have tried to continue to shift the burden to consumers. That explains the reason the cost of bread and other pastries has gone high in the state.
‘’The cost of diesel is killing us and running us out of business. People are complaining that the cost of bread is high. This is one of the reasons the price is high because by the time you add the cost of diesel to that of other inputs, you can barely survive as a business,’’ a baker, Mallan Hassan Musa told Vanguard in a chat.
Business owners, banks, others groan over high diesel costs in Sokoto
In Sokoto, banks, as in other parts of the country, now close daily at 3 pm to conserve diesel. The measure, according to officials of some of the banks, is to conserve diesel whose price is hovering around N1,000 per litre. Aside from the banks, frozen food shops are closing shops because of the high cost of diesel.
A respondent, Abubakar Shagari, told Vanguard that the cost of diesel has eroded the gains of setting up the business, as profits made from the business go for diesel.
‘’The kind of freezers we have can only be powered by diesel generators, and this requires a lot of diesel. We have had to stop some of our workers since we can no longer pay salaries. If this situation continues, we may have to shut down and think of what else to do to survive,’’ Shagari said in frustration.
Artisans bemoan high cost of petrol, diesel in Niger
In Niger State, artisans, such as barbers, hairdressers, and welders are calling on the government to come to their rescue, saying they could no longer afford the cost of fuel in the face of an epileptic power supply.
‘’I get a lot of jobs but there is no power to do them. I have a generator which I can no longer use because of the high price of diesel. I am losing my customers because people bring jobs for me and for weeks, or months, I cannot deliver those jobs because of the lack of power. I don’t know what to do again,’’ an artisan, Dan Azumi told Vanguard in a chat.
Azumi is not alone as a hairdresser in Minna, Victoria Sani, said she could no longer afford for her generator to run her salon. The cost of petrol in Minna hovers around N200. ‘’Please, we need you, people, to beg the government for us, for we are suffering. There is no job in the country and you manage to set up a small business and you can cope because of the situation in the country. What do they want us to do now? Die? she lamented.