Remove VAT on Diesel to Stimulate Price Reduction – MAN Tells FG

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Manufacturers Association of Nigeria (MAN) has called for the removal of the 5% Value Added Tax on automotive gas oil, pointing out that it is the most effective and immediate way to reduce the rising price of diesel in Nigeria.

Director-general of MAN, Segun Ajayi-Kadir, said the removal of VAT will become an instant stimulus for an immediate price reduction.

Ajayi-Kadir, made the call in a statement in Lagos during the weekend further called on the federal government to take the necessary action in order to prevent a total shutdown of production operations in the country.

According to him, “MAN is greatly concerned about the implications of the over 200% increase in the price of diesel on the Nigerian economy and the manufacturing sector in particular,” the statement reads.

“More worrisome is the deafening silence from the public sector as regards the plight of manufacturers. As a matter of urgency, the government should address the challenge of repeated collapses of the national grid which is causing acute electricity shortage, especially for manufacturers.

“In light of the gravity of the precarious situation that we have found ourselves as a nation and the looming dangers ahead, the expectations of manufacturers in Nigeria are as follows: that government should urgently allow manufacturers and independent petroleum products marketing companies to also import AGO (diesel) from the Republic of Niger and Chad by immediately opening up border posts in that axis to cushion the effect of the supply gap driven the high cost of AGO (automotive gas oil),” he said.

MAN also appealed to the federal government to issue licences to manufacturing concerns and operators in the aviation industry to import diesel and aviation directly to avert the avoidable monumental paralysis of manufacturing activities arising from total shut down of production operations and movement of persons for business activities.

It noted that more worrisome is the deafening silence from the public sector as regards the plight of manufacturers. Four obvious questions that readily come to mind that are seriously begging for answers are: What can we do as a nation to strengthen our economic absorbers from external shocks?

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“Should manufacturing companies that are already battered with multiple taxes, poor access to foreign exchange, and now over 200 per cent increase in the price of diesel be advised to shut down operations? Should we fold our arms and allow the economy to slip into the valley of recession again? Is the nation well equipped to manage the resulting explosive inflation and unemployment rates?”

Additionally, MAN urged the government to address the challenge of the repeated collapse of the national grid (twice within a week), which has been causing erratic electricity shortage in Nigeria.

MAN while also demanding for privatization of petroleum refineries said, “remove VAT on AGO as an instant stimulus for an immediate price reduction and expedite action in reactivating or privatizing the petroleum products refineries in the country.”


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