Lagos, Oct. 8, 2023: Mr Clement Isong, the Chief Executive Officer of the Major Oil Marketers Association of Nigeria (MOMAN), has commended the Federal Government’s decision to remove Value Added Tax (VAT) on diesel for a period of six months.
Mr Clement Isong, the Chief Executive Officer of MOMAN gave the commendation on Saturday in Lagos and said the move was a step towards reducing the effect of subsidy removal on the Nigerian economy.
President Bola Tinubu on Oct. 1 suspended collection of Value Added Tax (VAT) on diesel for six months, beginning from October.
According to him, VAT is a consumer tax, and diesel is a fully deregulated product whose price is determined by market dynamics.
Isong said that removal of VAT on diesel would directly reduce the price for consumers by the rate of 7.5 per cent.
He also noted that MOMAN was in supports of the government’s efforts to alleviate the hardships caused by the removal of subsidies on petrol.
In addition to the suspension of VAT on diesel, the government is also providing high-capacity Compressed Natural Gas (CNG) buses and promoting the conversion of vehicles to CNG.
He said that this aligns with the government’s goal of promoting alternative and cheaper fuels, reducing reliance on petrol, and addressing the escalating energy costs.
“The measures outlined, such as the suspension of VAT on diesel and the provision of high-capacity CNG buses, are some of the steps taken in the right direction to alleviate some of the burdens on consumers and the industry,” Isong added.
On CNG conversion, the MOMAN boss said that the idea of free conversion of vehicles to Compressed Natural Gas (CNG) at the startup phase of the initiative was a positive development.
“However, we have a preference for new vehicles with factory-fitted CNG options for quality assurance and safety reasons as well as easier maintenance.
“Where conversion kits are to be utilised, we emphasise the need to ensure technical accountability, particularly for safety reasons.
“MOMAN supports initiatives that encourage the adoption of cleaner and more affordable energy sources,” he said.
Isong, who is also the executive secretary of MOMAN, said that the previous subsidy arrangement had adverse effects on the Nigerian economy.
He said that the method of subsidy was untargeted, expensive, and unsustainable, particularly since the country was, in effect, subsidising the West African sub-region.
He said that the government had an opportunity to intervene on a short-term basis to manage escalating energy costs at a time when it was unusually high.
According to him, this is being done by many other countries around the world.
Isong said that MOMAN supports these short-term interventions, adding that provided they were targeted, affordable, well thought out, time-bound, and not negatively impact the Nigerian economy in the long term.