Nigeria Reverses Base Oil Import Tariff Cut


The Nigerian Custom Service this month stated that base oils will once again be subjected to an import tariff of 10 percent, cancelling previous announcements that the duty was being cut to 5 percent.

Officials with the Lubricant Producers Association of Nigeria expressed dismay that the agency would reduce a tariff reduction for which it had lobbied.

It is a worrisome development because the only motivation behind the increase in tariff on imported base oils to 10 percent is revenue generation, Lupan Executive Secretary Emeka Obidike said. It shows that the NCS puts its revenue target above national interest even when it impacts adversely on a particular sector of the economy.

Base oil importers pay a value-added tax of 5 percent, plus the import tariff, which until recently had been 10 percent. Domestic blenders called for the tariff to be halved, saying that would reduce their costs and help them compete with imported finished lubes.

In directives dated Aug. 27 and Sept. 10 and 22, NCS officials stated that the import tariff would be cut to 5 percent. For a brief period, some importers did pay the lowered duty, but then came the Oct. 2 circular from Deputy Comptroller-General A.A. Adewuyi indicating the duty would be 10 percent.

Lupan members said they also object to the NCSs decision to issue debit notes to local blenders that have already cleared their imported base oils at the lower 5 percent tariff.

There is so much at stake here – imagine, they are saying we should [pay another] 5 percent when we have [already] paid to clear our goods. We cannot do that because it will amount to retroactive action, said Taiye Williams, managing director of Lubcon International

Kayode Sote, principal consultant at Lube Services Associates, told Lube Report a reduction of the tariff on imported base oils will apparently need to go through the legislative arm of government because that is the only time when it can have weight and the requisite legal backing.

Williams said that the flip-flop on the part of the NCS is frustrating, but emphasized that blenders are not giving up.

We had an emergency meeting, Williams told Lube Report. We are considering going back to talk with the customs and get the frame work. We are doing all we can to remedy the situation.

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