Lagos — Electricity Meter Manufacturers Association of Nigeria, EMMAN has advised the federal government to review levies on imported finished electricity meters as one of the ways to fully resolve metering challenges affecting the power sector.
The Association gave the advice on Wednesday following President Muhammadu Buhari’s recent approval of one-year deferment of the 35 percent import levy on electricity meters.
According to them, reviewing the levies would further seal government’s decision to promote full local content in the manufacturing of pre-paid meters.
“The deferment might set back the development that was already on ground, dampen the hope of the local manufacturers as well as cripple the anticipated growth in the sector. And since we know President Buhari is an advocate of local content, we are sure discouraging growth isn’t what he wants”, the group said.
The Association argued that the directive to suspend 35 percent import duties on importation of pre-paid meters is an incentive for mass importation of pre-paid meters as against upscaling of production capacity of made-in-Nigeria meters which they said would have negative effects on the sector.
They advised government to encourage importers to set up factories so as to create a value chain that would provide employment opportunities to Nigerians.
It would be recalled that President Buhari had approved a one-year deferment of the 35 percent import adjustment tax (levy) imposed on fully built unit, FBU electricity meters HS Code 9028.30.00.00 under the 2019 fiscal policy measures for the implementation of Economic Community of West African States, ECOWAS common external tariff (CET) 2017 – 2022.
The approval for the adjustment followed a request by Zainab Ahmed, Minister of Finance, Budget and National Planning, to support the Nigerian Electricity Regulatory Commission, NERC roll out of 3million electricity meters under the Meter Asset Provider, MAP framework.
Speaking with SweetcrudeReports, member of the Original Equipment Manufacturer, OEM in the downstream power sector, and Chairman, Momas Electricity Meters Manufacturing Limited, MEMMCOL, Mr. Kola Balogun, Chairman said the 35 percent levy is the only protection that is available to manufacturers in the sector.
“The implication of this is that over 600million US dollars would be exported to China to import the approved 3million meters. This means we would further be developing another country’s economy and continue to increase unemployment, poverty, and underdevelopment in our country”.
“A way of financial intervention by the government can be that certain agreed percentage of the cost of meter supply would be advanced to us as the importers do with the Chinese and upon completion of installation balance payment would be made to us”.
“We do not even mind to furnish a bank guarantee as our own commitment in such a deal.”
He advised government to identify challenges facing local manufacturers and find a way to proffer solutions.
“For instance, there is high tariff rates payable to import raw materials that are not readily available in the country, the duty payable on our raw materials ranges from five percent per to 40 per cent plus other port charges”.
“These are like the ETLS of 0.5 percent, CISS of one we cent, VAT of 7.5 percent and surcharge of 7 percent whereas it is a one-off payment of 10 percent duty on the finished meters plus other port charges for Importers and we sell at the same regulated prices”.
“This is not fair to manufacturers given the amount of investments we put in place in terms of technology transfer, plant and machinery, human capital development through training and retraining, research and development,” he added.
Balogun suggested that way forward was backward integration whereby government would categorise the key local players in the sector and other sectors of the economy according to their production processes by separating assemblers from manufacturers and issue certificates accordingly. He listed the certificates to the include Semi Knock Down(SKD), Complete Knock Down(CKD ), Original Equipment Manufacturer(OEM) and Original Brand/Design Manufacturer(OBM/ODM).
The MEMMCOL boss said all the raw materials necessary to manufacture should be made to attract zero percent import tariff rate for OBM/OEM manufacturers while the relevant government offices should monitor the use of the gains from the import tariff policy to ensure that they plow it back into their investment.
Mr. Kunle Olubiyo, President, Nigeria Consumer Protection Network said there is an urgent need for Federal Government to put in place a very strict regime of sanctions against off-takers who have deliberately refused to accept indigenous technology and made-in-Nigeria pre-paid meters.
Olubiyo said the issues of customers centricity, customers satisfaction, value for money, customers behaviours, customers short changed, liquidity challenges and prospects for reasonable returns on investments amongst others were all linked to effective metering and closure of metering gaps.
“As important as the issue of metering is, there are other variables and extraneous factors that if not eradicated or boldly addressed once and for all, Nigerian Electricity Market will remain an elusive growth and vicious circles of stagnation.
“As Electricity Consumers, we have taken our time to present our position to Federal Government of Nigeria in a five-page document”.
“As a matter of fact, what we need now is a downward review of the presently discriminatory pricing of gas pricing methodology and disparity in the gas pricing business model with different pricing options for different Off-takers.
“As a matter of fact, what we need now is a review downward of the presently discriminatory pricing of gas pricing methodology and disparity in the gas pricing business model with different pricing options for different off-takers”.
“Electricity consumers are increasingly being made to pay for fixed cost, padded cost, over-bloated indexes of hyper inflated cost of production of each unit of electricity measured in kilowatt hour etc,” Olubiyo said, adding that with a political will and sincerity of purposes, Nigerian government could change the narratives and make Nigeria great again.