September 18, 2020

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President Buhari Has Approves Tax Deferment for Meters

President Buhari Has Approves Tax Deferment for Meters

To make electricity metres affordable for Nigerians, President Muhammadu Buhari has approved a one-year deferment of the 35 percent import adjustment tax imposed on Fully Built Unit (FBU) electricity meters HS Code 9028.30.00.00.

Finance Minister Mrs. Zainab Ahmed requested approval to support the Nigerian Electricity Regulatory Commission (NERC) in rolling three million electricity meters, which is under the meter asset provider (MAP) framework.

Earlier, the 35 percent import adjustment tax, which was approved in 2015 on the importation of FBU electricity meters, attracted a 10 percent import duty rate under the ECOWAS CET.

According to Ahmed: “The 35 percent levy was imposed on the recommendation of the Federal Ministry of Industry, Trade and Investment, to encourage local production, as well as protect investments in the local assembly of electricity meters.”

She noted, “an important feature of the MAP regulation is a gradual upscaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 percent with the potential of significant job creation in the area of meter assembly, installation and maintenance.”

In applying to the President to defer the 35 percent levy, Ahmed stated “the application of the 35 percent levy on electricity meters – HS Code 9028.30.00.00 has created a significant challenge to the smooth implementation of MAP scheme of NERC”.

Though the 35 percent levy has been in existence since 2015, the MAP regulations by NERC in 2018 to bridge the current electricity metering gap, did not factor the 35 percent levy in arriving at the regulated cost of electricity meters to end-users (consumers).

It was also noted that electricity consumers have embraced the opportunities presented by the MAP regulations and signed off to pay for electricity meters at the regulated prices approved by NERC.

A total of six million consumers have so far indicated an interest in electricity meters.

According to the Finance Minister, “some of the approved investors under the scheme have also, prior to the implementation of the appropriate HS Code 9028.30.00.00 for the importation of electricity meters, proceeded to import a significant stock of meters for rollout. This is in line with the timelines issued by NERC and the service level agreement agreed with the Electricity Distribution Companies (DISCOs)”.

In view of the local content for sourcing of electricity meters, the Minister stated: “It is approved that 50 percent of the current demand for electricity meters be considered for importation at the ECOWAS CET import duty rate of 10 percent zero levies”.

President Buhari Has Approves Tax Deferment for Meters

This, she said, “is to immediately bridge the gap between the demand for electricity meters and local supply”.

It is also envisaged that this will provide protection for local electricity meter manufacturers and the opportunity to ramp local capacity in the production of meters.

President Buhari Has Approves Tax Deferment for Meters