Small business owners have warned that the steep rise in the price of diesel, which they rely heavily on for electricity generation, will trigger job losses in Nigeria.
From a January average of N288 per litre, diesel now sells for over N800 per litre in Africa’s biggest economy, taking a toll on many sectors.
BusinessDay gathered that the significant increase in diesel prices has made businesses from private schools to cold rooms suffer huge financial losses.
Businesses are taking different measures to cushion the impact of the high diesel price on their operations.
“It is unfortunate that the price of the product keeps increasing and nothing is being done about it. The high inflation rate in the country means that people have less money to buy things, and when prices are going up and the masses have less money to buy those products, we are going to have a lot of joblessness in the country,” Femi Egbesola, president of Association of Small Business Owners of Nigeria, said.
Esu Olumba-Obu, group managing director of Royal Farms Ltd, described the high cost of diesel as a serious threat to business sustainability.
“With the high cost of diesel, many businesses are now faced with the option of closing down or retrenching staff to survive,” Olumba-Obu told BusinessDay.
Olushola Majiyagbe, a staff member of Graceville Schools, Ikeja in Lagos State, said the school resolved to reduce by 50 percent the number of hours they run on generators.
“We run the generator for four hours per day as opposed to 8-10 hours. Besides, we have installed solar energy to take care of the nights,” he said. “At night, we ask the students to switch off air conditioners and make use of fans while on solar. That way, we have been able to navigate our ways around the disturbing development.”
While some private schools in Lagos are reducing the use of diesel generators, some have had to increase school fees to stay afloat.
For one of the administrators of Study Habit Schools, Okota-Lagos, the burden of running generators for 24 hours a day is unsustainable.
The source said, “Study Habit Schools run an e-learning system that makes it compulsory to have the generator on until the school hours are over.
“Electricity service providers are not helping matters because of the problem with the national grid. We hope that the federal government will intervene to save the private school owners from the economic burden of running education centres under this ugly situation.”
Some of the parents who spoke with BusinessDay disclosed that they had received letters from their children’s schools showing an increment in fees.
One of the parents lamented the increase, wondering how he was going to pay an almost 70 percent increase in fees for his three children in a school.
Findings show that cold rooms operating on diesel generators have increased the price of all frozen products that they sell to consumers and retail outlets due to the hike in the price of diesel.
A consumer of the product identified simply as Kehinde said the price of frozen chicken had skyrocketed over the past months.
“I currently buy a carton of frozen chicken of the smallest size at N21,000 as opposed to its former price of N15,000, or sometimes I buy a carton of frozen chicken of the biggest size at N25,000 which was formerly priced at N17,000.”