Diesel Costs Affecting OPEX As Unsold Goods Reach N469.66 Billion – MAN

Article Abstract

• MAN has mentioned unsold items in 2022 reached N469.66 billion
• This is because of a number of elements together with the low buying energy of Nigerians because of inflation in addition to diesel prices which impression operational bills.
• Diesel prices have been on the rise lately and are impacting each small and enormous companies.

The Producers Affiliation of Nigeria (MAN) has blamed the rising price of diesel and different elements as unsold items in 2022 reached N469.66 billion. In response to the Director Normal of MAN, Segun Ajayi-Kadir, the stock of unsold items within the sector is N469.66 billion in 2022, in the meantime, N384.58 billion was recorded in 2021.

In response to the MAN President, Otunba Francis Meshioye, if gross sales proceeds can now not maintain enterprise overheads and working bills, companies can be compelled to scale down their operations which might lead to manufacturing unit closures, job losses, a decline in exports and way more.

Inflation

Vanguard studies that the bi-annual financial evaluation of the Producers Affiliation of Nigeria (MAN), attributed the rise in stock to a drop within the buying energy of Nigerians occasioned by sustained inflationary pressures and worsened by the money crunch that hit the financial system within the first quarter of 2023, within the wake of the Naira Redesign coverage.

Ajayi-Kadir emphasised that the excessive stock recorded within the interval is attributed to low buying energy within the financial system because of the declining actual revenue of households following the continual improve in inflationary pressures within the nation. He mentioned:

• “Within the second half of 2022 as the price of wheat and different meals inputs elevated; costs of fuels, significantly diesel rose by over 50%; price of transportation logistics together with transport escalated even because the impact of the COVID-19 pandemic is but to completely die down. Along with these challenges was the CBN coverage on redesigning the Naira.”

The diesel context

Within the final yr, Nigerian producers and companies have struggled with rising diesel prices. Many of those companies are linked to the nationwide grid and because of the epileptic energy provide, they obtain each day, have resorted to using diesel mills to run their companies, particularly within the operation of heavy equipment.

On account of this state of affairs, some run diesel mills for over 6 to six hours each day and the price of diesel is impacting their revenues. The Nationwide Bureau of Statistics (NBS) Diesel Worth Watch report for April 2023 states that Nigerians paid a mean of N842.25 per liter for diesel in April 2023, a 28.69% improve from the N654.46 per liter paid in April 2022. In the meantime, there was a 0.17% improve from the N840.81 per liter paid in March 2023.

What it’s best to know

This worth somersault for diesel is affecting the revenues of each small and enormous companies throughout the nation.

Nairametrics beforehand reported that in its outcomes assertion for the primary quarter of 2023, Dangote Cement introduced that it’ll discover using different fuels to chop energy prices. In response to the group, it has a price containment plan to enhance its vitality combine, and one of many plans is to utilize compressed pure fuel (CNG) for its vehicles.

In its firm outcomes assertion, Dangote Cement mentioned gasoline and energy consumption elevated barely by 2.2% to ₦56.7 billion in Q1 2023 when in comparison with the ₦55 billion recorded in Q1 2022.

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