Indigenous meter manufacturers have warned that the one year deferment of 35 per cent import duty levy on imported meters was capable of depleting the country’s foreign exchange reserves by $600 million.
The warning is coming Four days after 11 electricity distribution companies (Discos) began the implementation of a new tariff structure which have been condemned by Nigerians and civil society groups.
The group under the aegis of Electricity Meter Manufacturers Association of Nigeria (EMMAN), said the policy was inimical to the growth and promotion of local meter production in the country.
EMMAN Executive Secretary, Mr. Muhideen Ibrahim, said the directive to defer 35 per cent import duty on imported pre-paid meters was an incentive for mass importation of pre-paid meters as against upscaling local production capacity of made in Nigeria meters.
President Muhammadu Buhari, had recently approved a one-year deferment of the 35 per cent import adjustment tax (levy) imposed on fully-built unit (FBU) electricity meters (HS Code 9028.30.00.00).
This, according to the Federal Government was in consonance with the 2019 fiscal policy measures for the implementation of the Economic Community of West African States (ECOWAS) Common External Tariff (CET) 2017 – 2022.
The approval was specifically predicated on a request by the Minister of Finance, Budget And National Planning, Mrs. Zainab Ahmed to support the Nigerian Electricity Regulatory Commission (NERC) in rolling out three million electricity meters, under the Meter Asset Provider (MAP) framework.
According Ibrahim, local meter manufacturers were not patronised by the off-takers(Discos in conjunction with MAP) because manufacturers were not prepared to cut corners.
EMMAN, however, warned that the presidential approval on tax deferment for importation of three million finished electricity meters would have negative effects on the power sector, adding that the influx of imported meters for one year was capable of jeopardising government efforts at industrialising the country.
Rather, the association, advised government that importers should be encouraged to set up factories so as to create a value chain that would provide employment opportunities for Nigerians.
Also speaking, Chairman of Momas Electricity Meters Manufacturing Limited (MEMMCOL), Mr. Kola Balogun, said that the 35 per cent levy was the only protection to local manufacturers and not peculiar to the power sector alone and thus should be protected.
A worried Balogun said the removal of the 35 per cent levy remained an indication that the government was more disposed to favor importation to the detriment of the local industry.
“The implication of this is that over $600 million would be exported to China to import the approved three million meters. This mean we would further be developing another country’s economy and continue to increase unemployment, poverty and underdevelopment in our country.
We are bold to say that we at MEMMCOL have the capability to bridge the metering gap if the right policy is put in place.
This can be by way of financial intervention by the government whereby certain agreed per centage of the cost of meter supply would be advanced to us like the importers do with the Chinese and upon completion of installation balance payment would be made to us.’’