Power Crisis: Nigerian Manufacturers Seek Tax Rebate

Nigerian manufacturers are calling on the Federal Government to suspend Value Added Tax and other taxes as foreign exchange crunch and high cost of diesel bite hard on their operations.

Segun Ajayi-Kadir, the Director General, Manufacturers Association of Nigeria made the call on Thursday.

Nigeria’s VAT was increased to 7.5 per cent before the country plunged into the latest power crisis and tighter forex regime.

Since February, most parts of the country have been faced with poor electricity supply which the government blamed on the poor state of the hydropower plants.

Ajayi-Kadir said, “There is no way we can get power at reasonable price. We are suggesting that maybe we should remove VAT at least to reduce the price and then for government to quickly intervene by quenching the other pain point that we have, because, it is not only diesel that we are dealing with.

“So, if we have a lowering of the pressure on the imposition of tax, regulatory compliance cost and logistics and so on, we would be able to reduce the pressure on the sector that is threatening to make the first quarter of this year far worse than what we experienced in the same period in 2020 when we had Covid-19.”

He warned that the twin challenges of power and forex will drive prices of goods higher.

Ajayi-Kadir added, “It is a lose-lose situation for everybody. That is why we need to have a national conversation on this emergency. We have to understand whether we want our industries to function or not

“We have members that have applied (to central bank) for more than a million dollar and justifiably so because it can be verified and is given $50,000. So, it is just a joke actually to imagine that what you get is useful.

“It is not even enough to cover the cost of going to ensure that those raw materials are what we want.

“We go to the black market at cut-throat price. When other things are added to it, it is adding salt on injury.”

Diesel which is critical to power the generators used for their operations has risen to between N725 to N750.

“We have been clamoring for manufacturers to be treated as industrial users just like the Generating Companies (GenCos), because we are using this thing in the normal course of doing business. We are not selling.

“So, the price at which we are buying gas is now high. We are being buffeted from every angle. Electricity is not there, diesel that is the alternative is too expensive even the small-scale industries that manage to use petrol, that one too is not available. Then gas is expensive for us and it does not reach every part of the country,” the MAN boss added.

He also lamented that many manufacturers are seriously indebted to Nigerian banks.

“I don’t need to tell you how much we are borrowing money from the banks. I think something urgent and effective has to be done,” he added.