Tag: tariff

  • Terrible tariff

    Terrible tariff

    •Why is govt making books more expensive to read?

    THE recent imposition of a cumulative 62.5 per cent tariff on imported books is yet another demonstration of the policy inconsistencies that have come to define the Jonathan administration. A toxic combination of levies, duties and value-added tax, the tariff was approved in February.

    It is difficult to imagine a more wrong-headed policy. At a time when Nigeria is beset by a multi-dimensional crisis in its education system characterised by significant percentages in functional and absolute illiteracy, relatively low school enrollment, and an entrenched antipathy to reading, the Federal Government decides to make the importation of books even more difficult than it already is. In so doing, it contradicts the goals of the National Book Policy, and violates existing international conventions, such as the 1950 United Nations Educational Scientific and Cultural Organisation (UNESCO) Treaty, which commits members to facilitating the free flow of ideas by dismantling all barriers to trade in books and related materials.

    The ostensible reason for the measure is that of reviving the comatose local publishing industry by raising tariff barriers to external competition. However, such reasoning becomes untenable when the uniqueness of books is considered. They are not just another manufactured product that can easily be replaced with a viable local substitute; books are the building-blocks of knowledge, enlightenment and understanding. In other words, their intrinsic value is so great as to place them virtually beyond price.

    Like all badly thought-out policies, the new tariff strikes at unintended targets: it harms local publishers almost as much as it does the supposed foreign competitors. The relatively expensive and inefficient printing industry has made it very difficult for local publishers to produce standard-quality books at competitive prices. This has made it necessary for them to print abroad in countries like Dubai, China and Turkey. Now, they will have to choose between mediocre work at home and increased expense abroad.

    The local book market is not that profitable, either. In spite of a huge population of an estimated 170 million people, there is a deeply-engrained antipathy to reading which has affected the demand for books. This has artificially reduced profitability by restricting the market to educational texts, religious books and the occasional self-help treatise; even such best-sellers are vulnerable to the depredations of the pirates and smugglers that abound in the country.

    These shortcomings are worsened by policy issues that make long-term planning hard to implement: the lack of official support for local publishing; abrupt changes in prescribed books for educational institutions; unreliable school calendars; wildly-fluctuating costs of essential inputs like paper, ink and equipment, and the decline in bookshops, libraries and other outlets for books.

    The consequences of the new tariff are obvious. The increased expense of books will further deepen the low esteem in which reading culture is held, and by extension it will worsen the already-formidable challenges facing the education sector. This will in turn negatively affect Nigerians’ ability to properly prepare themselves for the knowledge economy which is the defining principle of development in the 21st century.

    If this grim fate is to be avoided, then the Federal Government must take another look at its imposition of the tariff on book importation. Books are not luxury items; they are simply too valuable to be treated like any other import. If the authorities are truly interested in building up the local book industry, they should consider a more nuanced approach to the issue by working with local publishers to see how cost-effective local production can be encouraged over time. This will include developing paper-production capacity, long-term financing for printing and publishing, and widening the market for books and related materials.

  • Tariff review?

    Tariff review?

    Yes, but the GENCOs and DISCOs have a lot to do to earn it

    BARELY six months after take-over, the new investors in the power sector have been reported as pushing for a review of the current electricity tariff. Articulating their case penultimate week while playing host to members of the House Committee on Privatisation and Commercialisation, Mike Uzoigwe, Chief Executive Officer of Egbin Power Plc, informed his visitors that the assets taken over from the defunct Power Holdings Company of Nigeria (PHCN) are – with the current tariff being paid by electricity consumers – not bankable. He maintained that only an increase in tariff would ensure adequate Return on Investment.

    His illustration of the case of the 1,320MW Egbin Power Plc is as persuasive as can be.  From the November 1, 2013 date of the take-over by the private investors to date, the company generated N13.3 billion worth of power to the national grid – an amount discounted to N13.16 billion by the market operator under the interim market rule.

    Meanwhile, the investor’s expenditure outlay was N13.7billion for the period – a loss of N576 million.  Of this, he claimed that only N6.5 billion had been paid by the market operator.

    Clearly, the case for the review could not have been better made. It was after all expected that the service providers would seek to align their tariffs to ensure cost recovery and on such terms as to guarantee favourable returns on their investments and as befitting a truly deregulated electricity market. In other words, it comes with the territory that the operators retain the flexibility to adjust their tariffs under the keen eye of the regulator – the National Electricity Regulatory Commission (NERC).

    Moreover, we understand the huge capital outlay in terms of the equipment and technology needed to turn the sector around, and the demand for credit from lenders are such that would require cash flow projections which the current tariff structure might not be able to support.  In those circumstances, the case for review cannot be said to be lacking considerable merit, given that the alternative is for the sector to suffer further relapse.

    Having said that, there are however, other sides to the tariff review argument which the operators cannot afford to ignore. The first is the need to overhaul the value chain to ensure that players keep up with their obligations. The suggestion, at least from the submission from the chief executive of Egbin Power Plc, is that this is not yet the case. We expect NERC to step in.

    The second issue is the pervasive corruption that has hobbled any meaningful progress in the sector. Nearly six months after, Nigerians are right to wonder whether indeed anything has changed. Not only have the vices associated with the PHCN festered, workers’ general attitude to work has remained largely the same. This is in spite of the new operators’ advertisement of improved and efficient service delivery. It is time for the operators to quit whining by focusing on what needs to be done. A major part of this is to devise means to collect their revenue.

    Related to this is the high level of inefficiency in the value chain –by-products of obsolete and outdated equipment. This is a major source of loss in power generation and hence revenue to the operator. Unfortunately, it is also responsible for denying the electricity consumer value for his money’s worth.

    The truth of course is that the electricity consumer has not been able to discern any headway in terms of new technologies and business model put on the table to justify the hyped take-over. It remains business as usual. Not only are they still hung on the old estimated and sometimes, crazy bills, promises of supply of pre-paid meters have gone unfulfilled; meanwhile service delivery continues to plummet.

    Tackling these issues would seem as fundamental as the craving for tariff review, which, in any case is much easier to effect.

  • Govt told to review tariff

    The Federal Government has been urged to review port tariff and make the ports attractive for business.

    Importers and clearing agents said the ports may witness low volume of imports next year if the government did not act fast.

    Importers and clearing agents who spoke with The Nation, said the review has become necessary to eliminate arbitrariness and ensure parity with other ports, particularly those of neighbouring countries.

    The National President, Association of Nigerian Licensed Customs Agents (ANALCA), Price Olayiwola Shittu, said port tariffs were not commensurate with the services rendered by terminal operators and they make the ports uncompetitive.

    He said the terminal operators need to emulate the Nigerian Shippers’Council that has abolished service charges, bank charge, commission on turnover and concessionaires’ service charge to reduce the cost of doing business in the ports.

    Also, the Managing Director, Folas Motors, Chief Fola Alakija, said the council had been implementing the Inland Container Depots (ICDs) project on Build, Own, Operate and Transfer (BOOT) basis to bring shipping to the door of importers.

    He said despite the claim by the government that it has reduced its agencies at the ports, some are still posing big challenges to port operations.

    The importer said there was the need to revive and modernise the railway as a primary mode for long distance haulage of cargo and to free the Lagos ports road.

    According to him, the railway will also reduce the cost of transporting cargo in and out of the ports and create employment.

    Alakija said there was the need to embrace a single window operation to eliminate human contact and the use of discretion, which has been identified as the biggest obstacle to quick cargo clearance from the port.

    He said the single window operation would not only facilitate trade, but also eliminate fraud and improve revenue generation.

  • Importers plan to thwart new tariff regime

    MOVES by the Federal Government to help plastic manufacturers, may be scuttled by raw materials importers, The Nation has learnt.

    The importers are said to be working against the government’s plan to ensure that the manufacturers produce without hitch.

    They are scheming to frustrate the five per cent hike in tariff for imported raw materials.

    The hike is aimed at discouraging the importation of some basic raw materials that are available locally.

    “Despite what the government is doing to improve on the industrial climate, some selfish businessmen are bent on ruining the process. Just because of what some people are making through importation of these raw material, they are clamoring for a reversal of the policy, which, according to him is not in the interest of the country,” he said.

    He said those who are calling for the suspension of the new tariff are members of the group, who have international partners that manufacture the raw materials abroad.

    However, he said the operators of Eleme Petrochemicals have invested to ensure that the two basic raw materials, polypropylene and polyethylene, are made available for the use of local manufacturers.

    He said while the Federal Government through its industrial revolution initiative aims at developing businesses to grow compete at the international level, some unpatriotic Nigerians are bent on frustrating the move.

    Though he admitted that one of the groups seeking a reversal of the policy has a case, in the sense that Eleme Petrochemical does not give credit facility, he added that this is not enough reason for them to canvass a review.

    He regretted that the quantity of polyethylene produced by the firm was in excess because the importers claim that the quality of the ones produced locally was inferior. Hence, the need to import.

    This is not acceptable because the company has resulted to exporting the excess left, since they are not getting patronage, a situation, he said.

    “If, indeed, there claims are right, then the right thing to do is to approach the company to improve on its quality. Instead of importing what is available locally. I think government should move in to protect our local industries,” he said.

     

  • Importers to Fed Govt: review tariff

    Importers to Fed Govt: review tariff

    The Federal Government has been urged to review port tariff and make the ports attractive for businesses.

    Importers and clearing agents, who spoke with The Nation, said the review became necessary to eliminate arbitrariness and ensure parity with other ports, particularly those of neighbouring countries.

    The National President, Association of Nigerian Licensed Customs Agents (ANALCA), Prince Olayiwola Shittu, said port tariff is not commensurate with the services rendered by terminal operators and it makes the ports uncompetitive.

    Shittu said the terminal operators need to emulate the Nigerian Shippers’ Council that has abolished service charges, bank charge, commission on turnover and concessionaires’ service charge to reduce the cost of doing business in the ports.

    Also, the Managing Director, Folas Motots, Chief Fola Alakija said the council had been implementing the Inland Container Depots (ICDs) project on Build Own, Operate and Transfer (BOOT) basis to bring shipping to the door of importers.

    He said despite the claim by the government that it has reduced its agencies at the ports; some of the agencies are still posing big challenges to port operations.

    The importer said there was need to revive and modernise the railway as a primary mode for long distance haulage of cargo and to free the Lagos ports road from its current poor state.

    According to him, the railway will also reduce the cost of transporting cargo in and out of the ports and create employment for the people.

    Alakija said there was need to embrace single window operation to eliminate human contact and the use of discretion, which has been identified as major as the biggest obstacles to quick cargo clearance from the port.

    He said the single window operation would not only facilitate trade, but it will also eliminate fraud and improve revenue generation.

     

  • NERC to review electricity tariff soon

    NERC to review electricity tariff soon

    The Nigeria Electricity Regulatory Commission (NERC) will soon review the Multi-Year Tariff Order, which came into force on June 1.

    The proposed review followed complaints by electricity consumers, including Small and Medium Enterprises (SMEs), about the N500 fixed fee they must pay monthly.

    Commissioner of Government and Consumer Affairs Abba Ibrahim said the commission has set up a process to resolve the complaints of the SMEs.

    He said the new tariff regime provided for a review mechanism in case of such complaints.

    Ibrahim insisted that the distribution companies must provide meters to all customers in the next 13 months as ordered by the regulatory agency in June.

    “We have had complaints from commercial operators; specifically, Small and Medium Enterprises, complaining about high fixed charges, equivalent to industrial categories.

    “It is a complaint that was laid and met these criteria for a review within 60 days of the MYTO order.

    “We are now in the fifth month of the implementation of the tariff.”

    He added: “These complaints were made within the 60 days of implementation and we have sat down with all the stakeholders.

    “My chairman, Dr. Sam Amadi, is meeting with the National Association of Small and Medium Enterprises on this issue as we speak.

    “We have consulted with the distribution companies. We have met severally and we are in the process of addressing this issue.

    “So it is a review that is being taken care of. It is unfortunate that a group has suffered this long but I can assure you we are putting all efforts to ensure that this is redressed.”

  • MAN to Fed Govt: Raise wheat flour tariff

    The Manufacturers Association of Nigeria (MAN), has urged the Federal Government to review upwards the existing 15 per cent duty on imported wheat flour, ahead of the 2013/2017 Common External Tariff regimes.

    The President, MAN, Kola Jamodu, told The Nation that the introduction of 10 per cent composite cassava flour in bread has necessitated the need for upward review of duty imposed on wheat flour.

    He said this would accelerate the manufacture of composite flour locally.”We are aware that duty is a veritable instrument for generating revenue for the Government. To this end, I want to recommend an upward review of the tariff rates of imported flour from 15 per cent to 20 per cent. This will discourage importation of foreign flour, while the cassava products will be promoted,” he said.

    Jamodu called on both the States and Federal Government to encourage its ministries, departments and agencies to patronise locally made products in all their activities, adding that this is the only way local manufacturers  can be promoted. He commended the government for the positive impact of some of its policies.

    He said: ”We are not unmindful of the onerous challenges facing the government. “In this regard, we want to assure the Federal Government of our  commitment to your noble mission to bring positive changes to our economy and sustenance of the manufacturing sector, especially in the area of job creation.

    ”This is even as the Director General of the Federal Institute of Industrial Research Oshodi, FIIRO, said consumption of cassava bread can save the economy N318 billion yearly.

    ”This figure is half of the N635 billion (about $3.9 billion) being spent annually to import wheat into Nigeria by the Flour Millers for bread making and other confectioneries. Since wheat is not produced in Nigeria it has to be imported.
    Furthermore, bread is produced from 100 percent wheat flour and as such huge amount of hard earned foreign exchange is used every year for its importation,” he disclosed.