Photo caption: MEMAN logo
The Major Energies Marketers Association of Nigeria has identified low taxation as one of the primary reasons fuel is cheaper in Nigeria than in other West African countries.
The Executive Secretary and Chief Executive Officer of MEMAN, Clement Isong, said this in an exclusive interview with The PUNCH on Monday.
According to Isong, comments by the President of the Dangote Group, Aliko Dangote, that Nigerians pay 55 per cent of what other West African countries pay for Premium Motor Spirit (petrol) were correct.
Isong said some West African countries even pay 50 per cent more than what Nigerians pay for petrol. “Yes, in some countries, it’s even less. It’s as low as 50 per cent,” he confirmed.
The MEMAN boss maintained that the tax payable on fuel consumption was lower in Nigeria compared to other countries. He explained that the tax is one per cent — 0.5 per cent each for infrastructure funds and NMDPRA.
“The taxation is lower in Nigeria. The taxation on fuel consumption in other countries is higher. The only taxation in Nigeria, I would say, is one per cent. 0.5 per cent for infrastructure funds, and 0.5 per cent for NPDRA. In other countries, the taxation is much higher,” he disclosed.
Also, Isong stated that the price was lower because Nigeria had what he called economies of scale, saying the country had a high turnover. Economies of scale refer to the cost advantage a business gains when increasing its production, leading to lower per-unit costs.
“Nigeria had economies of scale. We have economies of scale. Nigeria has the largest concentration. In Nigeria, the turnover is high. So, there’s a benefit of economies of scale. In other countries, the product can stay for a long time before it is sold, because of the cost and the slowness.
“But Nigeria has a very busy economy, and we have a very large consumption. The consumption in Nigeria is large. And we are the second, third, maybe fourth biggest economy in Africa. So, there’s a concentration of economic activity in Nigeria. Consumption is higher in Nigeria. The turnover is higher because the consumption is higher. That contributes to the low cost,” he said.
The major marketer corroborated a claim by Dangote that the price was lower in Nigeria because the Dangote refinery consistently reduced the petrol prices.
“Well, it is true also that for the last one or two months, he is the price leader, the person who has kept prices in Nigeria low. He is correct,” Isong attested.
Asked if Nigeria’s low petrol price is aiding smuggling despite the subsidy removal, Isong said he would not know. “I can’t say. I don’t know the level of smuggling now. Maybe it has gone down. Has it stopped? I wouldn’t know. But it has gone down,” he added.
Speaking to ECOWAS leaders over the weekend, Dangote said most Nigerians are unaware that they currently pay 55 per cent of what other West African countries pay for petrol.
Dangote said his refinery had aided the reduction of fuel prices by selling petrol between N815 and N820 per litre. The billionaire businessman stated this during a visit to the 650,000 barrels-per-day facility by the President of the Economic Community of West African States Commission, Dr Omar Touray, and his team.
Noting that Africa will benefit greatly by encouraging trade among its countries, Dangote stressed how the refinery has helped Nigeria to bring down the cost of refined products and production costs across many sectors of the economy.
“Last year, when we began diesel production, we were able to reduce the price from N1,700 to N1,100 at a go, and as of today, the price has crashed further. This reduction has made a significant impact across various sectors. It has supported industries, benefited those of us in mining, and provided vital relief to the agricultural sector. The effect has been far-reaching,” he said.
He also emphasised that Nigerians are benefiting from local refining as the price of petrol had dropped significantly compared to neighbouring countries.
“In neighbouring countries, the average price of petrol is around $1 per litre, which is N1,600. But here at our refinery, we’re selling at between N815 and N820. Many Nigerians don’t realise that they are currently paying just 55 per cent of what others in the region are paying for petrol,” he noted.
However, marketers and fuel importers said the constant reduction of fuel prices by the Dangote refinery affected their businesses, costing them billions of naira in losses.
