How 7.5% VAT on diesel can disrupt supply of petrol nationwide — NARTO warns
The Nigerian Association of Road Transport Owners (NARTO) has explained how the 7.5 per cent Value added tax (VAT) on petrol can disruption the supply of Premium motor spirit (PMS) otherwise known as petrol across the country.
Explaining this, the Association in a statement yesterday disclosed that diesel is the fuel used by about 90 per cent of the haulage trucks which convey petrol from the depots to the retail outlets nationwide.
Worried about the rising cost of transporting petrol across the country, the Nigerian Association of Road Transport Owners (NARTO) urged the Federal Government to remove the 7.5 per cent Value Added Tax, VAT, on diesel (Automotive Gas Oil) to avert disruption in the distribution of premium motor spirit (PMS)
NARTO National President, Alhaji Yusuf Lawal Othman explained that prior to the imposition of VAT on diesel, its cost was barely above N600/litre but it is now almost N1,000, which has also increased the cost of transporting PMS.
President Bola Tinubu had on assumption of office in May, removed subsidies on petrol which led to a jump in pump price from N195 per litre to the current N617 per litre in some parts of the country.
The Federal Government also abolished the Equalisation Fund from which transporters were paid bridging costs.
Othman noted that the high cost of fueling trucks coupled with rising cost of spare parts due to foreign exchange liberalisation have made operating the trucks very expensive.
He pointed out that recent policy of the government which has stopped further increase in the pump price of petrol means that the rising cost of transportation could not be passed on to consumers.
“This has made the cost of doing the business unbearable,” he noted.
Othman, who called for urgent government’s intervention, said, “We are talking about an immediate solution. And the instant intervention is the removal of 7.5 per cent VAT on the diesel because it is increasing the cost of the diesel.
“NARTO is complaining that the high cost of diesel is unbearable.”
He noted that the transporters have found themselves in a helpless situation, stressing, “Even if you discuss it with the marketers all they tell you is that the government has fixed the pump price on N617 that they cannot increase pump price so they cannot increase the fare for us. So we are in trouble.”
He noted that unless the government urgently stops the 7.5 per cent VAT on AGO, there will be shortage of supply of the petrol because the transporters may park their trucks in the face of the unbearable cost of operation.
He emphasised that the association, which is not proceeding on strike, wants the government to immediately act to avert petrol supply disruption.
“This is the problem we have: diesel is now getting to N1,000. And our transporters are still on the same rate. But the government will say they don’t have business with us because it is deregulated.
“But the marketers say if it is full deregulation PMS go up. Government pegged the pump price at N617 and because of that even if diesel reaches N1000 they can’t increase transportation for us.
“And to make things worse, the government put 7.5 per cent VAT for the AGO and the dollar is about N1,000 now,” he added.
