New Telegraph

Duty: Importers In Dilemma Over N552bn Trapped Palm Oil

Importers may have giving up on 475,000 tonnes of palm oil valued at N552 billion or – dered from Malaysia and Thai – land following the 35 per cent tariff and the floating import duty imposed by the Federal Government.

The tariff was slammed in order to boost local production of the produce. Findings from Nigerian Ports Authority (NPA) revealed that only one vessel, Zeze Start, berthed with 15,456 tonnes of the produce valued at $13.26 million at the Apapa Bulk Terminal Limited (ABTL) of the Lagos Port since the beginning of the year.

The produce was shipped to Nigeria from Malaysia in January as the Federal Government imposed a 35 per cent tariff on its importation (10 per cent duty and 25 per cent levy) or N165.6billion ($118.3 million).

It was also revealed that importers had been unable to take delivery of the produce as the import duty used in calculating cargoes at the port has gone up by 60 per cent.

Also, it was learnt that the cost of buying palm oil had reached $858 per tonne in the global market. Nigeria’s palm oil output is estimated at 1.3 million tonnes, while the demand is 2.1 million tonnes, leading to a supply gap of 800,000 tonnes.

Recall that the Chief Executive Officer of Palmtrade and Commod – ities Development Nigeria Limited (PCDNL), Henry Olatujoye, had said that Nigeria’s oil palm imports from Malaysia would keep on increasing as Nigerian investment in the industry was very low.

Also, a former Executive Director of the Nigerian Institute for Oil Palm Research (NIFOR), Celestine Ikuenobe, said at a national policy dialogue titled:

‘Achieving an economic and social-ecological resilient palm oil sector in Nigeria’, organised by IDH and Solidaridad, that production in the country had failed to meet demand due to population growth, urbanisation and deforestation.

He explained that annual demand for palm oil in Nigeria currently stood at three million metric tonnes, while annual production remains low at 1.4 million metric tonnes, noting that Nigeria currently spends 500 billion annually on imports to fill the deficit in production.

Findings from the consumers and market indicated that a litre of the commodity had gone up from N1, 800, while 50 litres is sold for N90,000 as November 2023.

It would be recalled that Fitch Ratings had forecast that average crude palm oil prices would be significantly lower in 2023 as industry output would likely be higher.

It noted: “We assume Malaysian benchmark crude palm oil prices to average $800 per tonne in 2023, compared with $1,200 per tonne in 2022.”

In 2020, Nigeria imported $351 million, making it the 23rd largest importer of palm oil in the world as imports from Malaysia was $242 million or 69 per cent; Singapore, $50.8 million or 14.5 per cent; Indonesia, $44.4 million or 12.7 per cent; Niger, $7.35 million or 2 per cent and Colombia, $3.75 million or 1.06 per cent.

Meanwhile, CBN had said that the country would have been earning approximately $20 billion annually from processing of palm oil, that is, half of the 2022 federal budget.

Importers and exporters operating in the nation’s maritime industry have lamented the harsh effects of the Central Bank of Nigeria’s (CBN) stringent policies, which has led to increased cost and inflation.

The industry stakeholders lamented that the policies had led to hardship for businesses and the average Nigerian while also noting that many are already running out of business due to the stringent policies.

A former Administrative Officer of the Alaba International Importers Association, Mr Emmanuel Amaife, noted that the policies had not been favorable, especially to the informal sector.

He said: “The cost of clearing goods has continued to rise, and the recent 60 percent increment in tariffs has made it even more challenging for us. The CBN needs to reassess its strategy to combat inflation.

“The inflation is a direct result of government policies. When the cost of bringing in items goes up,it reflects in the open market. The average Nigerian suffers the consequences of these policies.”

He acknowledged the challenges faced by the current administration but stressed the need for effective solutions.

“While I sympathise with the government for what they inherited, the average Nigerian is more concerned about how you will bring down the cost of living, transport, power supply, fuel, and other essentials,” he added.

Also, President of United Berger Motor Dealers Association (UBMDA), Mr Metche Nnadiekwe, expressed similar frustrations, emphasising the need for the CBN to stabilise the exchange rate.

According to him, “the current Customs exchange rate has made it difficult for businesses to operate. The constant increments have led to desperation among young Nigerians, driving some to crime. “The government must ensure that the dollar rate comes down to where it was before.

The constant increments have finished the business. We can’t continue like this, as it only leads to more suffering for the masses”.

 

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