Association decries increase in administrative charge of imported base oil

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By Raji Rasak

Lagos, Oct. 20, 2020 The
Lubricant Producers Association of Nigeria (LUPAN) on Tuesday decried the arbitrary increase of imported base oil charges from 10k to N1. 23k by the Petroleum Product Pricing Agency (PPPRA).

Mr Emeka Obidike, the LUPAN Executive Secretary, said it was even ridiculous for PPPRA to insist on the registration of operators already licenced by the Department of Petroleum Resources (DPR).
Obidike said in a statement in Lagos that the DPR had already licenced the operators to import base oil.

The executive secretary said that over the time, the operators had complained of different payment of dues and charges levied, which compelled them 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.

“All these culminated in the delayed release of consignments, accrual of unwarranted demurrage, other ancillary expenses and the eventual hike in price of blended lubricants.

“Severally, the association has written the PPPRA, on behalf of its members, protesting this state of affairs.

“It has categorically stated that by the Petroleum Act, 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.

“Others are that base oil is a raw material that undergoes further value addition, unlike other white products; 100 per cent import-dependent, likewise the additives applied, which risk is solely borne by the importer.

“It attracts duty of five per cent, and is not subject to regulation as its pricing is subject to market forces,” Obidike said.

According to him, there is also a patent lack of government intervention subsidy and unaccommodating policies.

He said mentioned the administrative and bureaucratic bottlenecks through which importers of base oil, manufacturers of lubricants were made to maneuver as well as the series of certifications.

Obidike said that the PPPRA, on the heels of DPR’s activities, arrived with modus operandi similar, albeit more complicated to that of the DPR’s operators and compelled them to furnish documents and certifications.
He said that most of them were not applicable, and in most cases, out-rightly alien to the business of base oil importation on pain of having their vessel unduly delayed.

“The general attitude of government agencies toward indigenous businesses are patently hostile, undermine, and is against the spirit and gain of the governments policy on the Ease of Doing Business.

“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 regularise.

“The legalised businesses being constantly picketed, threatened with the sealing of their plants, confiscation, seizure and destruction of products purchased with bank loans,” Obidike said.

The LUPAN executive secretary said that the PPPRA, in demanding the said charges was acting ultra vires of its powers as a regulatory agency.

He said: “It has, to all intent and purpose, unilaterally conferred upon themselves the functions of a revenue collection agency, at the expense of the sector.

“This constant picketing of legitimate businesses will most likely deter entrepreneurs from legalising 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.

“Illegal ventures are 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.”

Obidike said that all the processes of manufacturing quality products with affordable costs were 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, is determinedly undermining same.

“Should this trend be allowed to continue, a situation would arise wherein every agency of the government will unilaterally confer upon itself the authority to tax, levy and charge every product in the market under one spurious scheme,” he said.

Obidike then urged the government to come to the aid of legitimate businesses by winding-up the activities of PPPRA.

“The government should put an end to this desperate scramble for jurisdiction, by reviewing policies and laws that enable several agencies to regulate a single product, base oil, and also facilitate the simplification of the documentation and clearance process.

“The 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.

“Government should also avail the sector of 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,” he said.

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