Sarah Thompson
Thu, Sep 14, 2023 5:35 AM

Nigerian Transport Owners Call for Removal of VAT on Diesel to Prevent Petrol Distribution Disruption

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Nigerian Transport Owners Call for Removal of VAT on Diesel to Prevent Petrol Distribution Disruption
The Nigerian Association of Road Transport Owners (NARTO) has urged the federal government to remove the 7.5% Value Added Tax (VAT) on Automotive Gas Oil (AGO), commonly known as diesel. According to NARTO, the high cost of diesel due to the VAT imposition is impacting the distribution and supply of Premium Motor Spirit (PMS) petrol. Diesel is the primary fuel for about 90% of haulage trucks used to transport petrol from depots to retail outlets across the country. NARTO warns that unless the government takes swift action, the transporters may park their trucks, leading to a shortage of petrol supply.

The Nigerian Association of Road Transport Owners (NARTO) has called on the federal government to remove the 7.5% Value Added Tax (VAT) on Automotive Gas Oil (AGO), also known as diesel, to avert disruption in the distribution and supply of Premium Motor Spirit (PMS) petrol.

Diesel is the product for fueling about 90% of the haulage trucks which convey petrol from the depots to retail outlets nationwide.

Prior to the placement of VAT on diesel, its cost was barely above N600/litre but it is now almost N1,000, which has also increased the cost of transporting PMS.

Also, owing to the high cost of dollar exchange rate, it is expensive to purchase the spare parts of the trucks and batteries.

NARTO National President, Alhaji Yusuf Lawal Othman, who made this known in a press statement issued in Abuja, added that despite the high operation cost, the government has stopped further increase in the pump price of PMS.

He noted that since the marketers cannot raise their pump price, it is out of place to increase their cost of transportation.

"The instant intervention is the removal of 7.5% VAT on diesel because the high cost of diesel is unbearable," he said.

He noted that unless the government urgently stops the 7.5% VAT on AGO, there will be a shortage of supply of petrol because the transporters may park their trucks in the face of the unbearable cost of operation.

The Nigerian transport sector heavily relies on diesel to fuel their trucks, particularly haulage vehicles used for transporting petroleum products such as Premium Motor Spirit (PMS) or petrol. Diesel is a vital component in the supply chain, ensuring the timely distribution and availability of petrol across the country.

However, the recent implementation of a 7.5% Value Added Tax (VAT) on diesel has caused a significant increase in its cost. Previously, diesel was priced at just above N600 per litre, but the VAT imposition has driven the cost closer to N1,000 per litre. This drastic price hike is not only impacting the transporters but also increasing the overall cost of transporting PMS.

Furthermore, the devaluation of the Nigerian Naira and the high foreign exchange rates have greatly affected the affordability of truck spare parts and batteries. The combination of these factors has created a burden on transport owners, making it financially challenging for them to operate efficiently.

In a press statement, NARTO's National President, Alhaji Yusuf Lawal Othman, highlighted the adverse consequences of the VAT on diesel. He emphasized that while the government has halted the increase in pump prices for PMS, it is contradictory to burden the transporters with rising transportation costs.

Alhaji Yusuf Lawal Othman called for an immediate removal of the 7.5% VAT on diesel, asserting that it is the most effective intervention to alleviate the burden on transporters. Failure to address this issue promptly could lead to a shortage in the supply of petrol, forcing transporters to park their trucks due to the increasingly unbearable cost of operation.

The government's attention is therefore needed to ensure a smooth and uninterrupted distribution and supply chain for petroleum products. The removal of VAT on diesel would not only reduce operating costs for transporters but also contribute to maintaining an affordable and accessible supply of petrol for Nigerian consumers.

Source of content: OOO News 2023-09-14 News

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