Diesel Nears ₦2,000/Litre, Manufacturers Cry Out as Factories, Bakers Feel the Heat

• Manufacturers, bakers warn of crippling production costs

• Workers, households caught in fresh cost-of-living squeeze
• CORAN demands urgent action as diesel imports surge despite local refining capacity
• Industrial growth plunges as energy costs bite

Nigeria’s manufacturers are facing a fresh economic storm as diesel prices race towards ₦2,000 per litre, piling unbearable costs on factories, bakeries, farms, transport operators and other businesses already battling soaring operating expenses.

The latest surge in diesel prices is threatening to trigger another round of increases in the cost of production, transportation and food, raising fresh concerns over inflation, jobs and the already painful cost-of-living crisis.

For businesses that depend on diesel-powered generators to keep their operations running, the message is stark: produce more and pay more, or risk shutting down.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has warned that the situation requires urgent government intervention, arguing that diesel remains a critical source of energy for Nigeria’s productive sector.

In a statement by its Publicity Secretary, Eche Idoko, CORAN said sustained increases in diesel prices would inevitably translate into higher production and transportation costs, putting additional pressure on manufacturers operating in an already hostile business environment.

The association said one of the most effective solutions was to rapidly strengthen domestic refining and guarantee Nigerian refineries adequate access to crude oil.

Diesel paradox: Nigeria produces crude, yet imports fuel

CORAN said Nigeria must stop treating the Dangote Petroleum Refinery and modular refineries as competitors, stressing that both represent domestic assets capable of helping the country reduce its dependence on imported petroleum products.

According to the association, Nigeria’s modular refineries have an estimated combined installed capacity of about 35,000 barrels per day. If operating at full capacity, they could produce between 2.2 million and 2.8 million litres of diesel daily, depending on their configurations and product yields.

The Dangote refinery, CORAN said, reportedly produced about 19.1 million litres of diesel daily in July.

That means combined domestic output from the Dangote and modular refineries could potentially reach between 21 million and 22 million litres per day.

The figure becomes even more striking against reported national diesel consumption of about 14.7 million litres per day in July.

Yet Nigeria imported about 244.9 million litres of diesel during the same month.

For CORAN, the numbers expose a troubling contradiction: Nigeria has the crude, has refining capacity and has demand, yet businesses continue to grapple with expensive diesel and the country continues to import huge volumes of the product.

The association has therefore called on the Presidential Committee on Naira-for-Crude to increase and guarantee crude supplies to the Dangote refinery while extending the naira-for-crude arrangement to modular refineries.

It also urged the Federal Government to establish commercially sustainable crude supply arrangements that would enable Nigerian refineries to operate closer to their installed capacities.

‘The situation is crazy’

But while policymakers debate solutions, manufacturers say the crisis is already hitting their bottom lines.

President of the Premium Bakers’ Association of Nigeria, Engr. Emmanuel Onuorah, described the situation as extremely difficult, particularly for manufacturers whose businesses depend heavily on diesel.

According to him, diesel has become one of the biggest components of production costs.

“The situation is crazy,” he said, noting that diesel prices have risen dramatically compared with the same period last year.

Onuorah said diesel was selling at about ₦800 per litre around the same period last year but now costs between ₦1,800 and ₦1,900, depending on the location and source.

That represents an increase of roughly 125 per cent to 138 per cent, turning energy costs into a major threat to business survival.

“For us, we don’t even want to look. I don’t even look at the books again. I just produce and sell. I’m not thinking of profitability; I’m thinking of, let us just remain afloat in the bakery,” he said.

The situation is particularly painful for bakers, who are being squeezed from several directions at once.

Onuorah said flour millers had, in some cases, avoided significant price increases and even offered minor reductions. But whatever relief that provided had been swallowed by soaring electricity costs, frequent power outages, investment in alternative energy and the rising price of diesel.

“It’s a terrible situation we are finding ourselves in. I don’t even mind. I just pity every manufacturer in Nigeria, no matter what you are producing,” he said.

Workers feel the pain too

The diesel crisis is not confined to factory floors and business premises.

Onuorah warned that rising energy and transportation costs were also hitting workers, many of whom are struggling to survive on largely fixed incomes.

Employees must now contend with higher transport fares, food prices, rent and school fees, while businesses under pressure may themselves be unable to grant meaningful wage increases.

“A worker that has a fixed income and needs to go to work, the man wants to buy bread, he wants to buy a meal, he wants to pay school fees, he wants to pay inflated rent. How can that man survive?” he asked.

The result is a vicious cycle: higher diesel prices raise production costs; higher production costs raise prices; higher prices erode workers’ incomes; and weaker purchasing power makes it harder for businesses to sell.

‘Real sector can’t survive’

Economic expert Dr. Marcel Okeke said the real sector would continue to bear the brunt of rising energy costs.

“The real sector, which is manufacturing, will continue to have the short end of the whole deal,” Okeke said.

He argued that the problem is particularly severe because Nigeria remains heavily dependent on generators for electricity.

He described Nigeria as a “generator economy”, where households, businesses and institutions are exposed to the price of petroleum products every time fuel costs rise.

According to him, the high cost of doing business is also eroding Nigeria’s competitiveness and discouraging investment.

He said Nigeria needs an environment capable of attracting and retaining genuine local and foreign investment, rather than relying primarily on announcements of investment commitments that may never translate into actual capital inflows.

Okeke also pointed to the difference between foreign investment announcements and actual foreign direct investment, arguing that much of the capital entering Nigeria comes in the form of foreign portfolio investment, which can leave quickly when market conditions or investor expectations change.

Industrial sector under pressure

The diesel crisis comes as Nigeria’s industrial sector is already showing signs of weakening.

The Manufacturers Association of Nigeria (MAN) recently raised concerns over the performance of the industrial sector, saying real industrial growth nearly halved from 7.46 per cent in Q2 2025 to 3.96 per cent in Q2 2026.

MAN Director-General, Segun Ajayi-Kadir, attributed the deterioration largely to mounting energy and operating costs.

He said the electricity, gas, steam and air-conditioning supply sector contracted by 10.63 per cent during the quarter.

“The drop in manufacturing’s contribution to GDP from 9.57 per cent to 7.72 per cent in a single quarter highlights severe cost pressure, a high exchange rate, outrageous interest rates and exorbitant electricity tariffs facing domestic manufacturers,” Ajayi-Kadir said.

The figures underline the growing pressure on businesses that must simultaneously contend with expensive electricity, unreliable power supply, high interest rates, exchange-rate pressures, transportation costs and now diesel approaching ₦2,000 per litre.

A crisis that could spread across the economy.For manufacturers, the immediate battle is survival.For consumers, the danger is another wave of higher prices.For workers, it is the prospect of declining purchasing power.

And for government, the challenge is increasingly urgent: how to bring down the cost of energy without crippling the businesses and households that keep the economy moving.

CORAN said Nigeria must move beyond rhetoric and ensure that Nigerian crude increasingly powers Nigerian industry.

“Energy-sector reforms must wear a human face,” the association said, stressing that Nigerians should begin to feel the benefits of living in an oil-producing country.

Until that happens, the diesel crisis threatens to remain more than a fuel-price story.

It could become a production crisis, a jobs crisis and, ultimately, another painful blow to millions of Nigerian households.