President of Manufacturing Association of Nigeria (MAN), Dr Frank Jacobs has said the spiral effect of the proposed N5 levy on imported petroleum products will be “unprecedented” on the economy.
According to the News Agency of Nigeria (NAN), a Senate Committee had recommended a N5 levy chargeable per litre, on imported petrol, diesel products and other non-locally refined petroleum products.
The levy is expected to be used to fund and maintain road projects in the country.
Jacobs said although MAN was yet to officially meet over the issue, the proposal was not bad in its entirety.
The president, however, said the proposal is ill-timed and urged the lawmakers to reconsider the timing of the bill and the choice of products like PMS and diesel.
He said 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 N5 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 thought out, but the timing seems inappropriate in view of the prevailing economic circumstance of the country. The spiral effect of a levy of N5 on every litre of fuel imported into the country on the economy, especially in this time and season, will be unprecedented,” he said.
Jacobs said the economy is still in the negative growth region and 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 N5 levy will erode the purchasing power of Nigerians and trigger high inventory of unsold manufactured products,” he said.
The Abuja Chamber of Commerce and Industry (ACCI) also did not support the proposal.
ACCI President, Tony Ejinkeonye said it would worsen the plight of the masses and submitted that the proposal, if implemented, will cause untold hardship.
The president agreed that budgetary allocations were not enough to fund road infrastructure in the country.
He said though several federal roads across the country were in bad shape, imposing N5 levy was not the right approach.
“This levy should not be imposed now as Nigerians are already encumbered with lots of burden.
“This levy, if imposed, will worsen the plight of the masses because fuel plays a vital role in the life of an average Nigerian.
Also, President National Association of Nigerian Traders (NANTS) Mr. Ken Ukaoha, said the idea was good, but the timing wrong.
He said the nation is in crisis of economic recession already, hence, there is no need to add to the burden and advised government to deduct five naira from the present pump price of petroleum products and use it to finance road maintenance.