By Shittu Oluwadamilola
The Nigeria Employers’ Consultative Association (NECA) has warned that rising global oil prices are pushing up energy costs in Nigeria, with serious consequences for businesses already operating under significant strain.
In a press statement issued yesterday titled “Oil Gains, Rising Costs: NECA Warns of Growing Pressure on Businesses and Households,” the Director-General of NECA, Mr. Adewale-Smatt Oyerinde, said the surge in international crude oil prices—driven by geopolitical tensions involving Iran—is fueling higher domestic fuel prices and worsening inflationary pressures.
Oyerinde described the development as a troubling paradox, where increasing crude oil prices are translating into higher local energy costs, placing additional pressure on businesses and eroding consumers’ purchasing power.
“What we are witnessing is Nigeria’s oil paradox. Rising crude oil prices are pushing up domestic energy costs, squeezing businesses and worsening the cost of living for citizens,” he said.
He noted that fuel prices have risen sharply in recent days, with petrol exceeding ₦1,300 per litre in some areas and diesel nearing ₦1,800 per litre, reflecting the impact of global price movements.
According to him, energy costs remain central to Nigeria’s economy, as they directly affect production and distribution.
“Once fuel prices rise, the effects are immediate and widespread—transport costs increase, food prices rise, and the overall cost of doing business escalates,” he added.
Oyerinde stressed that sectors such as manufacturing, agriculture, and logistics are particularly vulnerable, as many firms rely heavily on diesel to sustain operations.
“At current price levels, many businesses are struggling to cope. Profit margins are shrinking, forcing companies to either pass on costs to consumers or scale down operations,” he said.
He further explained that global oil prices have surged due to geopolitical tensions, with Brent crude rising above $110 per barrel, thereby intensifying cost pressures across energy markets.
While external factors have contributed to the price spike, Oyerinde noted that the situation also exposes long-standing structural challenges within Nigeria’s energy value chain, including underinvestment, weak infrastructure, and supply inefficiencies.
“This is not only about global developments; it also reflects persistent constraints within our domestic energy system,” he said.
He warned that without urgent intervention, the situation could worsen, potentially leading to business closures, job losses, and a deeper cost-of-living crisis.
Oyerinde therefore called on the government to act swiftly to stabilise the downstream sector and provide targeted support for vulnerable industries.
“Government must ease supply constraints, stabilise prices, and offer relief to critical sectors,” he urged.
He also emphasised the need for long-term structural reforms, noting that Nigeria’s resilience will depend not on oil price movements, but on how effectively they are managed.
“This is a moment to strengthen institutions, improve transparency, and invest in sustainable energy solutions,” he said.
Oyerinde concluded that while rising oil prices could present economic opportunities, poor management would ultimately negate any gains.
“If not properly managed, the benefits of rising oil prices will be completely eroded by inflation and economic hardship,” he warned.
