Manufacturing stakeholders have stated that the diesel VAT waiver is a good thing, but it only provides short-term relief, particularly for businesses that depend on the product.
The Times stated that the Manufacturers Association of Nigeria’s Director Ambrose Oruche said the organization had not yet provided a formal response.
However, he pointed out that since the VAT is currently 7.5%, the announcement will immediately result in a 7.5% decrease in the price of diesel.
He claimed that a 7.5% decrease will significantly lower the cost of production, but the primary issue is that fuel costs N1,000 or more at the majority of filling stations.
The suspension of the VAT, according to the chief executive of the Centre for the Promotion of Private Enterprise and former director general of the Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, will have some effect on manufacturing because, no matter how little, whatever the government can do to lower the cost of energy should be done. He claimed that long before Organised Labour requested it, he expected it to be completed.
The suspension of the diesel VAT, he argued, was a good thing. “And if you ask me, I believe they ought to continue. To reduce energy costs, all additional fees assessed by any government body on diesel fuel should be removed.
“The same holds true for food. I’m not advocating for them to start importing food in large quantities, but anything related to food production, food processing, and any levies that raise the cost of food should be suspended for the time being so that the populace can catch their breath.”
He emphasized that by removing some of the levies on energy goods, Nigerians may be able to address some of their energy shortages, no matter how minor. He also noted that palliative measures shouldn’t just focus on raising salaries.
An economist, Dr. Peter Jakpor, stated that a 7.5% VAT suspension only results in a N75 reduction in the price of diesel, which is negligible given that the cost of diesel rises practically every week.
“What good is an N75 decrease in the price of diesel when it may still reach the N1,000 level the following week, he stated? Local manufacturing is the best way to meet our fuel energy needs.”
Following the Federal Government’s recent engagement with labour and trade unions, it has been announced that treasury-paid federal government employees will only receive a provisional wage increase of N25,000, effective for a period of six months.
The Federal Government has also stated its commitment to accelerating the introduction of buses powered by compressed natural gas. With the termination of the PMS subsidy, new problems in public transport have arisen that are being addressed by this project.