Nigeria Hikes Tariff on Lube Imports


Nigeria will soon increase its tariff on imported finished lubricants and greases from 10 percent to 30 percent. Suppliers lauded the change as a way of supporting domestic production and claimed it will boost the quality of the market.

At the current level, Nigeria in line with the rest of the Economic Community of West African States Common External Tariff, which imposes a 10-percent duty on finished lubes and greases imported into the region. But the Nigerian government has voted to add an extra 20 percent Import Adjustment Tax to further protect the countrys market from substandard imported lubricants.

Nigerian Finance Minister Ngozi Okonjo-Iweala announced in March that the increase would take effect on April 11 and last for five years. However, according to Wale Adeniyi, of the Nigerian Custom Service, the increase has not yet been implemented. We have it in our system, but there are some clarifications we are waiting for from the Federal Ministry of Finance before it comes into effect, Adeniyi told Lube Report.

The Lubricant Producers Association of Nigeria hailed the increase on imported finished lubricating oils as a promising development for local blenders. The new tariff will boost confidence in the government, check capital flight, encourage technology transfer, encourage ventures into rarely explored terrains like synthetic lubes and create job opportunities, said Executive Secretary Emeka Obidike. We can also be sure of the quality of lubricant produced as local blenders are compliant to set standards.

Honeywell Oils and Gas Ltd.s head of lubricants, Emmanuel Ekpenyong, concurred and said that the new import tariff will also help local blenders increase exports. The new tariff regime will promote export of Nigerian lubes to other parts of the West African sub region as CIF (Cost, Insurance and Freight) prices will become very competitive, he said.

However, Ekpenyong cautioned that the new tariff should not be applied across the board because specialty oils are not produced locally and must be imported. Specialty lubricants, such as premium turbine oils, special synthetic‎ oils, premium compressor oils and specialty greases that [are not currently] produced in Nigeria should be granted waivers, and the tax [should be] pegged at between 10 percent and 15 percent, Ekpenyong added. If the 30 percent tax is paid on this category of products, they will become too expensive to procure on the local market.

Lubcon International Managing Director Taiye Williams said the higher duty will help create jobs. [The tariff increase] is all we have been hoping for. We thank the federal government for its commitment to support local manufacturers. It means we can actually play well in our local market and also in the sub-region. It means jobs for so many of our youth.

ECOWAS member states include Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.

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