Breakdown of fuel marketing firms imminent, as govt slams new tax burden
There are indications that fuel distribution crisis may soon hit the country, if the Federal Government goes ahead to implement the new tax regime imposing 0.5 per cent tax on the gross turnover of the petroleum marketing firms.
The Depot and Petroleum Products Marketers Association (DAPPMA) has raised concerns that more than half of the fuel marketing firms in Nigeria may close down, if such tax burden is slammed on their businesses.
The imminent closure of businesses poses threat to smooth distribution of petroleum products across the country.
Executive Secretary, DAPPMAN, Olufemi Adewole, who disclosed this at the maiden edition of the Platforms Africa Continental Forum, Lagos 2022, said the petroleum marketing firms’ trading margin was too small that it cannot pay such amount sustainably.
Adewole said: “Petroleum marketers operate a very low margin but the turnover is very huge. Unfortunately, the margin does not correspond with the turnover.
He disclosed that the margins they were getting when fuel sold at N40 per litre is the same they are still getting when it rose to N160 per litre and N200 per litre respectively.
According to him, “The Finance Act 2020 says the marketers have to pay 0.5 percent 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.
Recall that the fuel marketers had recently bemoaned the acute scarcity of foreign exchange (forex) in the official market, which is currently threatening the importation, distribution and impacting deeply on prices of petroleum products across the country.
The group had called on 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 DAPPMAN, shortage of Forex coupled with several unauthorised levies, bad roads are among the factors making fuel importation and distribution burdensome for members.
