The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) on Tuesday opposed the federal government’s planned additional 0.5% tax on the gross turnover of petroleum marketing enterprises.
Speaking at the first Platforms Africa Continental Forum in Lagos, Olufemi Adewole, the executive secretary of DAPPMAN, stated that the tax will drive many businesses out of the nation’s economy.
Adewole stated that there are signs that a fuel distribution crisis could soon strike the nation if the government applied the new tax system.
He insisted that if taxes were imposed on fuel marketing companies in Nigeria, more than half of them would shut down.
The DAPPMAN executive claimed that the smooth distribution of petroleum products across the nation is threatened by the impending business closures.
“The petroleum marketing firms’ trading margin is too small that they cannot pay such an amount sustainably.
“Petroleum marketers operate at a very low margin but the turnover is very huge. Unfortunately, the margin does not correspond with the turnover,” Adewole said.
He continued by saying that their profit margins remained the same at N160 per litre and N200 per litre as opposed to when fuel was sold for N40 per litre.
“The Finance Act 2020 says the marketers have to pay 0.5 per cent of 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.”
To improve the supply and distribution of Premium Motor Spirit (PMS) across the country over the holiday season, he said the organisation had urged the government to grant petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate.
According to DAPPMAN, importing and distribution of fuel is difficult for members due to a lack of foreign exchange (forex), several unauthorised taxes and bad roads.
The importation, distribution and prices of petroleum products throughout the nation are currently threatened by the acute shortage of foreign currency on the official market, which has a significant impact on prices.
