If the government can budget N4 trillion (about $9 billion) for petrol subsidy, it should be able to afford incentives to improve energy access and promote the development of renewable energy.
This was the position of the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf while addressing the upsides and downsides of the 2022 fiscal policy measures.
With many firms incurring huge production costs as a result of high energy prices, he proposed zero import duty on solar panels, inverters, solar batteries, zero import duty on all renewable energy equipment and installations, zero VAT on renewable energy equipment, including batteries and tax holidays for renewable energy companies in the country.
He explained that already, industrialists are currently contending with high energy costs as diesel has gone up by over 400 per cent, public power supply has become increasingly unreliable and there is a slump in consumer purchasing power, which is affecting aggregate demand.
He further appreciated the role of traders and middlemen in the international trade process, especially from an inclusion perspective, adding that not all small and medium enterprises (SMEs) have the capacity to directly import their raw materials, machinery, equipment or other inputs on their own.
He said: “It is the traders and middlemen that help to fill this gap in the economy. It is therefore discriminatory and unfair to exclude middlemen and traders from the importation of raw materials, equipment, spare parts or machinery which may be required by some small-scale industrialists who do not have the capacity to import these items on their own.
“Therefore, in the spirit of inclusiveness, traders and middlemen should be allowed to also import some of these items for onward sales in smaller quantities to small-scale industrialists.”
While appreciating the intent and objective of the fiscal policy, the CPPE recommended that the fiscal policy measures should be released alongside the Finance Act and the Appropriation Act in order to facilitate planning, reduce uncertainty, minimize investment risk and boost investors’ confidence.
“The CPPE is concerned about the red tape inherent in getting approvals from the Federal Ministry of Finance for the importation of items with concessionary import duty. We would like to see the removal of these bottlenecks. While appreciating the essence of the National list, we would like to propose that access to fiscal incentives should be devoid of bottlenecks and bureaucracy.”
“We therefore recommend that once the Fiscal Policy document has been approved by the government, the Nigeria Customs Service should be left to fully implement these policies without further recourse to the Ministry for additional approvals.
“We believe that the Customs is competent enough to interpret the Fiscal Policy and determine eligibility for fiscal incentives. The idea of seeking approval and exemption certificates from the Ministry of Finance or any other Ministry is not consistent with the spirit of the Ease of Doing Business and should therefore be discontinued”, he added.