Nigeria could lose $600 million to imported meters

Nigeria may lose over $600 million to capital flight in favour of China in addition to hurting the local content pursuit with the recent presidential approval to defer for one year, the 35 per cent import taxes on three million pre-paid electricity meters, which are to be imported into the country, the meter manufacturers in the country have warned.

The domestic meter manufacturers under the aegis of Electricity Meter Manufacturers Association of Nigeria (EMMAN) said such approval was a disincentive and inimical to the development of local capacity in the downstream sector of the country’s power industry and appealed to the president to review the decision.

President Muhammadu Buhari had last week approved a one-year deferment of the 35 per cent 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 which was to help close the metering gap in the nation’s electricity sector, followed a request by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, to support the Nigerian Electricity Regulatory Commission (NERC) to roll out three million electricity meters under the Meter Asset Provider (MAP) framework.

MAP scheme is a gradual up-scaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 per cent with the potential of significant job creation in the area of meter assembly, installation and maintenance.

Advancing the position of the association in a statement issued yesterday, the Chairman of Momas Electricity Meters Manufacturing Limited (MEMMCOL), Mr. Kola Balogun, said that the 35 per cent levy was the only protection available to them in the sector, which according to him, was not peculiar to the sector alone.

Balogun said the removal was an indication that the government was more disposed to favouring importation to the detriment of the country’s local industry.

“The implication of this is that over $600million would be exported to China to import the approved three million meters. This means that we would further be developing another country’s economy and increase unemployment, poverty and underdevelopment in our country.

We are bold to emphatically say that we at MEMMCOL, have the local capability to bridge the metering gap if the right policy is put in place. This can be by way of financial intervention by the government whereby certain agreed percentage of the cost of meter supply would be advanced to us like the importers do with the Chinese, and upon completion of installation balance payment would be made to us”, he said.

The meter manufacturers also said that the directive to defer 35 per cent import duties on importation of pre-paid meters was an incentive for mass importation of pre-paid meters as against upscaling of production capacity of Nigeria in pre-paid meters.

According to EMMAN, the local manufacturers are not being patronised by off-takers at the downstream of the power sector value chain because they are not prepared to cut corners.

The association noted that it believes that the presidential approval of tax deferment on importation of three million finished electricity meters would have negative effects on the power sector, arguing that allowing such decision to run for a year would jeopardise government’s efforts at industrialising the country.

The group stressed that the deferment might set back the development that was already on ground while the decision would dampen the hope of the local manufacturers as well as cripple the anticipated growth in the sector.

It noted that as an in-depth manufacturer in the sector, it takes an average of three months to set up SKD (Semi Knock Down (SKD)/ Complete Knock Down (CKD) factory.

The association, however, advised the federal government to encouraged importers to set up factories so as to create a value chain that would provide employment opportunities to Nigerians.

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