. Agency increases administrative charges
. Levies trigger high cost of lubricants
By Fredrick Wright
The Lubricant Producers Association of Nigeria (LUPAN), are currently groaning under unfavorable business environment as they bemoaned the recent arbitrary increase of administrative charge from N0.10 kobo to N1.23 kobo by the Petroleum Products Pricing Regulatory Agency (PPPRA).
Executive Secretary, LUPAN, Emeka Obidike, in a statement to SlyNews lamented that the multiple levies imposed on the indigenous manufacturers by PPPRA are putting the local products at disadvantaged position against imported lubricants.
It stated: “We, the Lubricant Producers Association of Nigeria (LUPAN), are constrained to express our distress and consequent disapproval of the propensity of the Petroleum Product Pricing Agency [PPPRA] to arbitrarily inflate its unwarranted charges from N0.10Kobo to N1.23Kobo per litre of base oil imported,”
The group also frowned at the insistence on the registration of operators already licensed by the Department of Petroleum Resources [DPR] to import base oil, despite being shown a genuine DPR license.
“Over time the association has been besieged by complaints from operators of being tasked with the payment of dues, charges, levies and/or compelled to register with agencies irrelevant to their operations or the sector as a whole.
“Operators, on pain of having their consignments confiscated, find themselves acceding to their demands, and further find themselves inundated by a deluge of paperwork, draconian directives, bureaucratic protocols, all culminating in the delayed release of consignments, accrual of unwarranted demurrage, other ancillary expenses and the eventual hike in price of blended lubricants.
Obidike said the group has written severally to the PPPRA on behalf of its members protesting this state of affairs and categorically stating the following:
“By the Petroleum Act, the Department of Petroleum Resources is the primary regulator of the petroleum sector, overseeing activities that relate to production, importation and exportation of petroleum products and indeed all affairs relating to the oil and gas industry (upstream, midstream and downstream) and that the PPPRA’s continued refusal to acknowledge this fact could be construed as a blatant disregard, duplications and encroachment on the authority and jurisdiction of the DPR;
“Base oil is a raw material that undergoes further value addition, unlike other white products; 100% import-dependent, likewise the additives applied, which risk is solely borne by the importer; attracts duty of 5%, and is not subject to regulation as its pricing is subject to market forces. There is also a patent lack of government intervention (Subsidy) and unaccommodating policies.
“That the administrative and bureaucratic bottlenecks through which importers of base oils/manufacturers of lubricants are made to maneuver as well as the series of certifications, authorizations and clearances with their attendant levies and charges are potently detrimental to the business as they are in most cases time consuming, increase the expenses and other ancillary costs connected to receiving the product and significantly inflates the market cost of indigenously produced lubricants making it less attractive than it imported substandard counterpart.
“That the PPPRA, on the heels of DPR’s activities, arrive with modus operandi similar albeit more complicated to that of the DPR’s; operators are compelled to furnish documents and certifications, most of which are not applicable and in most cases out-rightly alien to the business of Base Oil importation on pain of having their vessel unduly delaed.
“That the general attitude of government agencies towards indigenous businesses are patently hostile, undermine, and is against the spirit and grain of the Governments policy on the Ease of Doing Business , as they are swift to shut down and mete out stringent penalties at the slightest hint of non-conformity or administrative oversight rather than assist same to regularize.
“That legalized businesses being constantly picketed, threatened with the shutting down/sealing of their plants, confiscation, seizure and destruction of products purchased with bank loans, is tantamount to killing the goose that lays the golden egg, as these establishments are relentlessly drained of monies under guises of taxes and levy, by an organization that adds no value to the sector and has in light of the full deregulation of the sector, become obsolete in their objectives and functions.
“That the PPPRA, in demanding said charges is acting ultra vires its powers as a regulatory agency and has, to all intent and purpose have unilaterality conferred upon themselves the functions of a revenue collection agency, charging N1. 23kobo on all petroleum product used in the country, to wit, PMS, AGO, DPK, BASE OIL, BITUMEN, LPG, among others, at the expense of the sector.
“This constant picketing of legitimate businesses will most likely deter entrepreneurs from legalizing their businesses who, further enticed by the appeal of the freedom from the financial commitment of setting up standard factories and plants, employing staff, submission to several regulatory agencies, their protocols and levies, a myriad of inspections and supervisions, threat of penalties and sealing, the propensity for illegal businesses to mushroom uncontrollably will escalate,” he stated.
Obidike added that Illegal ventures are now flagrantly peddling their wares with all impunity, encouraged by the gradual vacuum created in the lubricant market by the persistent decrease of manufacturing processes and inflated market cost of blended lubricants consequent upon such ruses.
According to him, importers/blenders of lubricants are currently beholden to as much as sixteen agencies, at the point of entry of the raw material – base oil.
“In light of the above, the process of manufacturing quality products with affordable costs is gradually becoming unworkable; goods are manufactured and imported into the country, thereby boosting capital flight, decreasing technology transfer, glutting the job market and generally threaten the subsistence of patriotic industrialists.
“We are most disheartened and disillusioned by the fact that a government agency such as the PPPRA which should be at the forefront of every effort and scheme of the Government to bring about a more conducive environment for businesses to thrive, are determinedly undermining same; should this trend be allowed to continue, a situation would arise wherein every agency of the government will unilaterally confer upon themselves the authority to tax, levy and charge every product in the market under one spurious scheme or the other.
The group however appealed to the Federal Government to come to the aid of legitimate businesses, by winding-up the PPPRA.
The lubricant producers also demanded that government put an end to the desperate scramble for jurisdiction, by reviewing policies and laws that enable several agencies regulate a single product – base oil and also facilitate the simplification of the documentation and clearance process.
It also demanded that government should ensure strict compliance and precise application of set laws, rules and standards, by its officials, while discouraging its manipulation, arbitrary formulation of draconian directives and regulations and wrongful application of same.
The government is also urged to avail the sector its full support by way of viable accommodating industry – friendly policies, incentives, palliatives and intervention funds and in general foster encouraging fiscal conditions favourable the sector’s growth.
