The Manufacturers Association of Nigeria, (MAN), has demanded the removal of Value-Added Tax (VAT) on diesel to address the current price hike.
MAN, in a reaction to the current increase in the price of Automotive Gas Oil, (AGO), otherwise known as diesel, recalled that over the years, the sector has been battered by numerous familiar challenges that have plummeted a number of industries in Nigeria and converted industrial hubs in many parts of the country to warehouses of imported goods and event centres.
The association identified key challenges confronting the sector as; high operating cost environment occasioned largely by inadequate electricity supply and the high cost of alternative sources, excessive regulation and taxation, and inadequate supply of foreign exchange for importation of raw materials, spare parts and machinery that are locally available.
All these, it noted, have culminated in the lacklustre performance of the sector.
Commenting on the rising cost of diesel, the Director-General of MAN, Segun Ajayi-Kadiri, called for immediate removal of VAT on the product as an instant stimulus for an immediate price reduction as well as expedite action in reactivating or privatising the petroleum products refineries in the country.
Ajayi-Kadiri observed that the current increase in prices of crude oil and other refined petroleum products such as diesel is one of such disruptions occasioned by external shocks that confirm the interwovenness of economies in the world.
In the short term, he said, the disruption occasioned by the invasion of Ukraine by Russia will continue to heavily ruffle the global energy space and upset the supply of petroleum products thereby causing the persistent increase in the price of refined petroleum products, including AGO.
In the long run, it will result in an enormous increase in the prices of other manufacturing inputs like wheat, maize, fertilizers and 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, he stated.
To remain in business, the manufacturers demanded the development of a National Response and Sustainability Strategy to address challenges emanating from the on-going invasion of Ukraine by Russia and consistent support to manufacturing 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 a multiplier effect on employment.
