Distributive policy

Fuel crisis threatens Buhari regime’s new fiscal policy, marketer warns

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) on Tuesday expressed concern over the new 0.5% tax on the gross turnover of petroleum marketing companies proposed by the Federal Government.

Olufemi Adewole, the executive secretary of DAPPMAN, told the inaugural Platforms Africa Continental Forum in Lagos that the tax would bankrupt many businesses.

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

He insisted that more than half of the fuel marketing businesses in Nigeria would shut down if the tax burden was imposed on them.

According to him, the imminent closure of companies threatens the proper distribution of petroleum products across the country.

“The trading margin of the oil marketing companies is too low for them not to be able to pay such an amount on a sustainable basis.

“Oil traders operate on a very low margin, but the turnover is very huge. Unfortunately, the margin does not correspond to the turnover,” Mr. Adewole said.

He added that the margins they made when the fuel was sold at 40 Naira per liter were the same when the price went up to 160 Naira per liter and 200 Naira per litre, respectively.

“The 2020 finance law stipulates that traders must pay 0.5% of their gross turnover by the end of this year.

“It is unimaginable that probably half of the existing oil marketing companies could go bankrupt if the new tax regime is implemented.

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

He said the association had called on the government to give oil traders access to foreign exchange at the official rate of the Central Bank of Nigeria (CBN) to improve the supply and distribution of Premium Motor Spirit (PMS ) across the country this Christmas season.

According to him, the shortage of foreign currency (forex) coupled with several unauthorized levies and bad roads make importing and distributing fuel difficult for members.

Fuel traders have recently lamented the acute shortage of foreign exchange in the official market, which threatens importation and distribution and has a profound impact on the prices of petroleum products across the country.