By ANDREW OJIEZEL
The President of Manufacturing Association of Nigeria (MAN), Dr Frank Jacobs said his sector is against the proposed N5 levy on fuel.
Jacobs noted that it will bring spiral effect of the proposed five Naira levy on imported petroleum products will be “unprecedented” on the economy.
It would be recalled that Senate Committee last week recommended a five Naira levy, chargeable per litre, on imported petrol and diesel products and on other non-locally refined petroleum products.
If allowed, the levy is expected to be used to fund roads projects, and maintenance in the country.
Jacobs disclosed that though MAN was yet to officially meet over the issue, the proposal was not bad in its entirety.
The president however said the proposal was ill-timed and that the lawmakers should reconsider the appropriateness of the timing of the bill and the choice of products like PMS and diesel.
He noted that its implementation would drive up inflation, further erode the purchasing power of Nigerians and frustrate the growth of the manufacturing sector.
“On the face value, the five Naira levy appears harmless but a critical examination of the transmission mechanism of its economic and political implications revealed enormous resultant challenges.
“This is not because the bill is not well taught out but the timing seems inappropriate in view of the prevailing economic circumstance of the country.
“The spiral effect of a levy of five Naira on every litre of fuel imported into the country on the economy, especially in this time and season will be unprecedented.”
According to him the economy is still in the negative growth region and currently on a journey out of recession.
“Capacity utilisation is a little above 50 per cent, cost of production is pretty on the high side with expenses on self-generated power using diesel responsible for about 36 per cent of the total cost profile.
“Interest rate is still hovering around the 28 to 30 per cent mark and inflation is still double digit oscillating within the 17 percentile range.
“The introduction of the five Naira levy will erode the purchasing power of Nigerians and trigger high inventory of unsold manufactured products.”