The Centre for the Promotion of Private Enterprise (CPPE) has outlined measures businesses and government can adopt to cushion the impact of rising petroleum product prices.
CPPE Chief Executive Officer, Muda Yusuf, made the recommendations in an advisory note issued on Sunday, March 15.
He warned that the escalating cost of energy could further strain Nigeria’s already fragile business environment.
He noted that the recent surge in global energy prices, driven by geopolitical tensions in the Middle East, has intensified cost pressures on businesses worldwide.
According to Yusuf, the effect is particularly severe in Nigeria because companies heavily depend on petrol and diesel to power their operations, due to persistent electricity supply challenges, while also grappling with rising transportation and distribution costs.
“The current surge in global energy prices, driven by escalating geopolitical tensions in the Middle East, has intensified cost pressures for businesses across many economies.
“In Nigeria, the impact is especially severe because enterprises depend heavily on petrol and diesel to power their operations amid persistent electricity supply challenges,” Yusuf said.
He stressed that the development is compounding an already difficult operating environment for businesses, many of which are contending with high inflation, elevated interest rates and weak consumer purchasing power.
The CPPE boss warned that without deliberate adjustments by businesses and supportive policy interventions from government, rising energy costs could significantly erode profit margins and threaten the sustainability of many enterprises, particularly small and medium-sized businesses.
Pinnacle daily reports that the Middle East crisis involving Israel, the United States, and Iran has caused a spike in the prices of crude oil in the international market, and is spiralling into a hike in the domestic pump price of petroleum products.
For businesses
To mitigate the impact, the CPPE advised businesses to prioritise energy efficiency as the most immediate and cost-effective response to rising fuel prices.
He said firms should review their energy consumption patterns to minimise waste and maximise productivity per unit of energy used.
“Businesses should intensify efforts to improve energy efficiency within their operations as a key strategy for managing rising fuel costs,” Yusuf said.
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He added that optimising generator operating hours, deploying energy-efficient machinery and promoting energy conservation among staff could significantly reduce fuel consumption and operating expenses.
Yusuf, who is a renowned economist, also urged companies to diversify their energy sources in order to reduce exposure to volatility in petrol and diesel prices.
He encouraged firms to gradually explore alternative energy options such as solar power systems, hybrid solutions that combine solar and generators, as well as gas-powered generators where infrastructure is available.
While acknowledging that the initial investment cost could be significant, Yusuf said the long-term savings from renewable and hybrid energy solutions are becoming increasingly attractive amid persistently high fuel prices.
The organisation also called on businesses to improve logistics and supply chain efficiency, noting that energy price shocks often translate directly into higher transportation costs.
According to the CPPE, strategies such as consolidating deliveries, optimising transport routes, strengthening fleet management systems and leveraging shared logistics platforms can help reduce fuel consumption and lower overall logistics expenses.
Yusuf said businesses may need to adopt flexible pricing and stronger financial management practices to cope with rising operational costs.
He noted that gradual price adjustments, improved product value propositions and innovative packaging strategies could help firms remain competitive in a fragile consumer market.
The CPPE boss further urged companies to strengthen cash flow management by cutting non-essential expenditures, improving inventory management and renegotiating supplier payment terms where possible.
Yusuf also highlighted the potential benefits of collaboration among businesses operating within industrial clusters, explaining that shared power generation systems, logistics services and warehousing facilities could help reduce energy and transportation costs through economies of scale.
For government
The CPPE stressed the need to expand fiscal and regulatory incentives to accelerate the adoption of renewable energy by businesses.
The organisation said measures such as tax incentives for solar installations, import duty waivers for renewable energy equipment and fiscal support for energy-efficient technologies would help reduce the structural energy cost burden on businesses.
It also called for the creation of affordable financing windows by the government, development finance institutions and commercial banks to support investments in renewable energy systems and energy-efficient equipment, particularly for small and medium enterprises.
The CPPE further emphasised the importance of strengthening Nigeria’s domestic refining capacity as a buffer against volatility in global energy markets.
Yusuf said expanding local refining and ensuring a stable supply of crude oil to domestic refineries would reduce Nigeria’s dependence on imported petroleum products, ease pressure on foreign exchange and improve the country’s balance of trade.
However, he maintained that the most sustainable solution to Nigeria’s high energy cost environment lies in improving the reliability of the electricity supply.
“The most sustainable solution to Nigeria’s high energy cost environment lies in improving the reliability and availability of grid electricity,” Yusuf said.
He noted that a more dependable power supply would significantly reduce the heavy reliance of businesses on petrol and diesel generators.
He stressed that improving electricity generation, strengthening transmission infrastructure and enhancing the efficiency of distribution networks would help lower production costs across the economy and boost business competitiveness.
The CPPE added that while the latest surge in global energy prices highlights the vulnerability of economies to external shocks, a combination of proactive business adaptation and supportive government policies could help Nigeria mitigate the impact of the current energy crisis and strengthen the resilience of its business environment.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
