The Federal Government will be losing N24 billion annually by virtue of its 75 percent import duty waivers to importers of Crude Palm Oil (CPO) operating in the Free Trade Zone (FTZ).
This is according to the Plantation Owners Forum of Nigeria (POFON), Oil Palm Growers Association of Nigeria (OPGAN) and the National Palm Produce
Association of Nigeria (NPPAN).
This expected loss is based on the assumption that about 600,000 tons of CPO which is the domestic deficit, calculated at last year’s average, would be imported annually.
Uday Pilani, managing director, Presco Plc said government must ensure protection for the local farmer by putting proper duties on the imported crude palm oil. Pilani said, “If not, the local producer that
produces at higher costs is forced to sell at the same price as the cheap imports and cannot survive. That was how the local industry was killed in the 1960s,”
Pilani stressed that the local industry plays a more vital role as the importer can solely carry out transactions from a computer, while the local producer provides jobs, trains staff, supports host communities, has a lot of linkages to other businesses and pays taxes.
According to the local producers, government is subsidising the few companies operating in the FTZ at the expense of the majority that are operating outside the FTZ by granting them 75 percent on the 35 percent duty normally paid by importers on imported CPO. Therefore, these companies are expected to pay only 8.75 percent as duty on imported CPO.
Henry Olatujoye, National President NPPAN said, “By granting import waivers to companies that have an oil palm refinery but do not have an oil palm plantation, the government is saying that the plantation owners can as well forget about the business.”
Olatujoye said the association has complained to the ministers of finance, industry and agriculture and added that the ministry of finance has stated that it is not aware that any CPO importer is being given import waiver. Olatujoye however said that the document establishing the Lekki Free Trade Zone allows CPO importers 75 percent waiver on the 35 percent duty expected to be paid on imported CPO.
He said if at all any company that has a refinery for CPO must be granted waiver if there is a shortfall, it should be to those who have made tangible investments in oil palm plantations.
Kayode Babatola, vice president NPPAN said if the trend of import waiver continues, many oil palm producing outfits would fold up and the labourers would leave the rural areas and relocate to the urban centres in search of jobs.
Babatola said, “the government has still not come to appreciate that cost of production for the local producer is higher than those in Malaysia and Indonesia. So, by allowing waivers, it is helping those countries to create jobs at the expense of its own citizens.”
He therefore recommended that no waiver should be granted on CPO, so as to safeguard the local industry, as many local producers would also join the bandwagon of importers and start bringing in palm oil through the Nigerian seaports or through ECOWAS countries, taking advantage of the ECOWAS Trade Liberalisation Scheme (ETLS) in which they would pay about 5 percent as duty.
These local producers are unequivocal in their submission that the twin issues of 75 percent CPO tariff waiver for companies in the FTZ and the rising wave of CPO imports would spell doom for the already bourgeoning oil palm industry and the Agricultural Transformation Agenda (ATA).
OLUYINKA ALAWODE
