Buhari Approves One Year Deferment Of 35% Import Tax On Electricity Meters

President Muhammadu Buhari has considered and given approval for one-year deferment of the 35 per cent import adjustment tax imposed on fully built unit electricity meters HS Code 9028.30.00.00.

The tax deferment is given under the 2019 fiscal policy measures for the implementation of Economic Community of West African States common external tariff 2017 – 2022.

The development was confirmed in a statement issued by the Special Adviser, Media and Communications to the Minister of Finance, Budget and National Planning, Yunusa Tanko Abdullahi

Based on the government’s commitment to tackling the electricity challenges in the country, the approval for the adjustment was specifically predicated on a request by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed

The approval, the statement said was given to support the Nigerian Electricity Regulatory Commission in rolling three million electricity meters, which is under the Meter Asset Provider framework.

The request had made reference to a 35 per cent import adjustment tax which was approved in 2015 on the importation of FBU electricity meters which attracted ten percent import duty rate in the ECOWAS CET.

According to Ahmed, “The 35 percent levy was imposed on the recommendation of the Federal Ministry of Industry, Trade and Investment, to encourage local production, as well as protect investments in the local assembly of electricity meters.

“An important feature of the MAP regulation is a gradual up scaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 per cent with the potential of significant job creation in the area of meter assembly, installation and maintenance.”

Based on Section 9 of the MAP regulations, MAPs must source a minimum of 30 percent of their contracted metering volumes from local meter manufacturing companies in Nigeria.

Further changes to the minimum local content thresholds would be as specified in the NERC local content regulations.

It was learnt that the application of the 35 percent levy on electricity meters – HS Code 9028.30.00.00 has created a significant challenge to the smooth implementation of MAP scheme of NERC.

Even though the 35 percent was in existence since 2015, the MAP regulations by NERC in 2018 to bridge current electricity metering gap, did not factor the 35 per cent levy in arriving at the regulated cost of electricity meters to consumers.

Findings further revealed that electricity consumers have embraced the opportunities presented by the MAP regulations and signed off to pay for electricity meters at the regulated prices approved by NERC.

A total of six million consumers have to date been captured to have indicated interest for electricity meters.

Some of the approved investors under the scheme have also, prior to the implementation of the appropriate HS Code 9028.30.00.00 for the importation of electricity meters, proceeded to import a significant stock of meters for roll out.

This is in line with the timelines issued by NERC and the service level agreement agreed with the Electricity Distribution Companies.

The statement also stated that the Central Bank of Nigeria had directed Deposit Money Banks in the country to lead electricity market collection.

It said that collections and remittances of the DisCos to both Nigerian Bulk Electricity Trading, Transmission Company of Nigeria would be done by DMBs.

The banks are also responsible in providing guarantees to DisCos.