The Manufacturers Association of Nigeria (MAN) has recently claimed that the only way to address current hike in commodities is removing the removal of Value Added Tax (VAT) on petroleum products.
Recall that in recent times, petrol scarcity has surfaced in many parts of the country bringing uncertainties and panic in the manufacturing sector following multiple challenges arising from inadequate electricity supply and inaccessible foreign exchange.
MAN, in a said the current increase in price of diesel have over the years plummeted the 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.
Leadership Newspaper reports that while the director-general of MAN, Segun Ajayi-Kadiri was reacting on the issue, he called for immediate removal of Value Added Tax(VAT) on Automotive Gas Oil, AGO, also called Diesel as instant stimulus for immediate price reduction and expedite action in reactivating or privatizing 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 diesel is one of such disruptions occasioned by external shocks that confirms the interwovenness of economies in the world.
No doubt, he said, the recent short supply and over 200 per cent increase in the price of AGO are part of the backlashes from the ongoing invasion of Ukraine by Russia.
This resulted in numerous economic sanctions on Russia by the US and EU, which propped up the price of crude oil to $120 per barrel (now moderated to about $100) as Russia oil export is isolated.
He said the association was greatly concerned about the implications of the over 200 per cent increase in the price of AGO on the Nigerian economy and the manufacturing sector, adding, “more worrisome is the deafening silence from the public sector as regards the plight of manufacturers.
Written by Adekunle Biodun