MAN to FG: Remove VAT on diesel to curtail price hike

The Manufacturers Association of Nigeria (MAN) has asked the federal government to remove the value-added tax (VAT) on diesel as an instant stimulus for an immediate price reduction. 

Segun Ajayi-Kadir, director-general, MAN, made the call in a statement issued on Saturday in Lagos.

The association also called on the federal government to avert the total shutdown of production operations, adding that industries were being converted to warehouses of imported goods and event centres. 

“MAN is greatly concerned about the implications of the over 200 per cent 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.”

The group also urged the government to develop a response strategy to address challenges emanating from the armed conflict between Russia and Ukraine.

“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),” it said.

The association also requested the government to “issue licences to manufacturing concerns and operators in the aviation industry to import diesel and aviation fuel 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”.

“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? 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?” it added.

It also implored the government to continue to support manufacturing to accelerate recovery from COVID-19 and previous bouts of recession. 

MAN said this was to avert the complete shutdown of factories nationwide with a multiplier effect on employment.

The MAN also asked the federal government to “as a matter of priority develop a National Response and Sustainability Strategy (NRSS) to address challenges emanating from the ongoing invasion of Ukraine by Russia”. 

The MAN also called on the government to “address the challenge of the repeated collapse of the national grid (twice within a week), which is causing acute electricity shortage in the country, especially for manufacturers”. 

It demanded that the government should “remove VAT on AGO as an instant stimulus for an immediate price reduction and expedite action in reactivating or privatising the petroleum products refineries in the country”.

It also demanded that the government should “restrict the export of maize, cassava, wheat, food-related products and other manufacturing inputs available in the country; and grant concessional foreign exchange allocation at the official rate to manufacturers for the importation of productive inputs that are not locally available”.

The association represents over 3,000 manufacturers across 10 sectors, 76 sub-sectors, and 16 industrial zones.