Remove VAT on diesel, reactivate nation’s refineries, MAN tells FG

The umbrella body of the nation’s manufacturers, the Manufacturers Association of Nigeria (MAN), has called on the federal government to suspend Value Added Tax (VAT) on diesel, as well as reactivate or privatise the nation’s petroleum products refineries, to enable it drive down the cost of the commodity.

The Association, in a statement signed by its Director General, Segun Ajayi-Kadir, expressed concerns at the present price increase of diesel by over 200%, noting that if not quickly addressed, such increase would worsen the state of the nation’s real sector, and by extension, the economy.

MAN charged the federal government on the need to quickly realize the fact that that the world has become a global village. It therefore argued that the disruption, occasioned by the invasion of Ukraine by Russia, would continue to heavily ruffle the global energy space and upset the supply of petroleum products thereby causing persistent increase in the price of refined petroleum products including AGO. This development, it added, would, in the long run, result in enormous increase in the prices of other manufacturing inputs like wheat, maize, fertilizers and the raw materials.

“By the time the current domestic reserve of manufacturing inputs is exhausted, in the face of acute shortfall in supply, we are afraid that the prices of manufactured products will soar. Ironically, the Nigerian economy is completely dependent on importation of refined petroleum products including diesel and other vital manufacturing raw materials and there are currently no sufficient alternatives,” the Association stated.

Besides, the sudden hike in the price of diesel, it stated, had continued to exert untold hardship on the manufacturing sector, leading to the closure of many industries, and a reduction in capacity utilization, a further decline in GDP, large scale unemployment across 76 sub-sectors and increase in crime rate, among other vices;

As a way of averting this, therefore, the association called on the federal government to grant concessional forex allocation at the official rate to manufacturers for importation of productive inputs that are not locally available.

It also urged the government at the centre to urgently allow manufacturers and independent petroleum products marketing companies to also import AGO from the Republic of Niger and Chad by immediately opening up border posts in that axis in order to cushion the effect of the supply gap, which, it stated, had induced the high cost of AGO;

MAN also stressed the need for the federal government to continue to support manufacturing, so as to accelerate the process of recovery from the aftermath of COVID-19 and previous bouts of recession to avert the complete shutdown of factories nationwide with multiplier effect on the employment.

“We are also calling on the federal government to issue licenses to manufacturing concerns and operators in the Aviation industry to import diesel and aviation fuel directly to avert the imminent, but avoidable monumental paralysis of manufacturing activities arising from total shut down of production operations and movement of persons for business activities,” the Association stated.

The Voice of the nation’s manufacturers would also want the federal government to urgently address the challenge of repeated collapse of the national grid, causing acute electricity shortage in the country, especially for manufacturers.

“The Association, as a matter of priority, would want the federal government to develop a National Response and Sustainability Strategy to address challenges emanating from the ongoing invasion of Ukraine by Russia,” it added.