Friday, December 9, 2022

Fuel crisis looms over Buhari regime’s new tax policy, marketers warn

Mr Adewole said there were indications that a fuel distribution crisis may soon hit the country if the government implemented the new tax regime.

• November 22, 2022
Vehicles queue for petrol
Fuel queue used to illustrate the story

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) on Tuesday expressed concern over the new 0.5 per cent tax on gross turnover of the petroleum marketing firms proposed by the federal government.

Olufemi Adewole, the executive secretary, DAPPMAN, said at the maiden edition of the Platforms Africa Continental Forum in Lagos that the tax would put many firms out of business.

Mr Adewole said there were indications that a fuel distribution crisis may soon hit the country if the government implemented the new tax regime.

He was emphatic that more than half of the fuel marketing firms in Nigeria would close down if the tax burden were slammed on them.

According to him, the imminent closure of businesses threatens the smooth distribution of petroleum products across the country.

“The petroleum marketing firms’ trading margin is too small that they cannot pay such an amount sustainably.

“Petroleum marketers operate a very low margin, but the turnover is very huge. Unfortunately, the margin does not correspond with the turnover,” said Mr Adewole.

He added that the margins they made when fuel sold at N40 per litre were the same when the price rose to N160 per litre and N200 per litre, respectively.

“The Finance Act 2020 says the marketers have to pay 0.5 per cent from their gross turnover by the end of this year.

“It is unimaginable that probably half of the petroleum marketing firms existing now may go under if the new tax regime is implemented.

“Except the regulator, which is Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), approves a new margin for the marketers.”

He said the association had called on the government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of Premium Motor Spirit (PMS) across the nation this yuletide season.

According to him, the shortage of foreign exchange (forex) coupled with several unauthorised levies and bad roads make fuel importation and distribution burdensome for members.

The fuel marketers recently bemoaned the acute scarcity of forex in the official market, which is threatening the importation, and distribution and deeply impacting prices of petroleum products across the country. 

(NAN)

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