On Tuesday, the Nigerian Association of Road Transport Owners urged the Federal Government to repeal the 7.5% VAT on automotive petrol oil, also known as diesel.
According to NARTO, the cessation of VAT on diesel has become critical in order to avoid interruptions in the distribution and supply of Premium Motor Spirit, also known as fuel.
According to the association, diesel is required to fuel around 90% of the haulage trucks that transport PMS from depots primarily in the South to various filling stations across the country.
It was discovered that prior to the implementation of VAT on diesel, the price of the commodity was barely above N600/litre, but had now risen to nearly N1,000/litre. It also claimed that this had increased the cost of transporting PMS by transporters.
On June 20, 2023, The PUNCH exclusively reported that the Federal Government confirmed that it had commenced the implementation of the payment of 7.5 per cent VAT on diesel.
Officials of the Nigeria Customs Service and Federal Inland Revenue Service had confirmed this to our correspondent, and noted that diesel was not exempted from the payment of VAT based on the VAT Modification Order 2021.
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In a statement published in Abuja on Tuesday, Yusuf Othman, National President of NARTO, stated that despite the high cost of operations in the downstream arm of the oil business, the government had ceased increasing the pump price of PMS.
He noted that because marketers were unable to raise their pump prices for petrol, they were unable to raise their costs for the transportation of PMS, making the cost of doing business unsustainable for transporters.
“What we’re talking about is an immediate solution, and the immediate intervention is the removal of 7.5 percent VAT on diesel, because it raises the cost of diesel,” Othman explained. NARTO claims that the high cost of diesel is intolerable.
“Even if you talk to the oil marketers, all they tell you is that the government has fixed the pump price (of petrol) at N617/litre, and that because they can’t raise the pump price, they can’t raise the fare for us.” So we’re in big difficulty.”
He stated that unless the government immediately repeals the 7.5 percent VAT on diesel, there will be a shortage of petrol because transporters may be forced to park their trucks.
“Diesel is now getting to N1,000/litre, and our transporters are still on the same rate,” he says. However, the government will claim that they do not do business with us because it is deregulated. But the marketers say if it is full deregulation PMS would go up.
“Because the government set the (PMS) pump price at N617, even if diesel reaches N1000/litre, they (marketers) cannot raise transportation costs for us.” To make matters worse, the government has imposed a 7.5 percent VAT on AGO, and the dollar is now worth roughly N1,000.”
He noted that most federal roads were terribly bad, adding that “from Okpella to Lokoja is bad; from Agai to Bida to Kutugi is bad.”
“We need serious government attention, and it should be urgent,” the NARTO president stated. First and foremost, the government must examine the 7.5 percent VAT on AGO, which is one of the reasons why the price of AGO has risen.
“Secondly, the government must consider the pump price of PMS, so that marketers must consider the transportation price for us.” This is because marketers cannot raise transport prices without first examining the pump price.
“And if they do not do that, we have no choice than to continue to park. And if we continue to park, it will create unwanted disruption of supply and we don’t want that. “Although we are not necessarily interested in the increase in pump price (of petrol) since Nigerians are suffering, if they (marketers) don’t increase our transportation cost, with AGO at N1,000/litre and the dollar close to N1,000, we cannot operate.”
