Financial Act Hurts Investment in Downstream Oil Sector – Marketers Claim

The Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has issued a warning that the application of the 0.5% tax on gross turnover by petroleum marketing businesses as specified in the Finance Act 2020 may have an impact on investment in the downstream oil and gas sector.

They also raised concern that oil marketers may cease business by year’s end or borrow money to pay taxes.

Speaking at the Platforms Africa Continental Forum in Lagos on Monday with the theme “Legislative and Business Survival in Africa: A Review of Nigeria’s 9th Parliament and Agenda for the 10th Assembly,” Mr. Olufemi Adewole, the Executive Secretary of DAPPMAN, remarked,

“By the end of this year, the Finance Act 2020, mandates that petroleum marketing companies must begin to pay 0.5 per cent of their gross turnover as tax. It is actually a challenge for us and we are already engaging Government.”

Adewole said that the Finance Act has a negative impact on the commercial operations of petroleum marketers and that the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) should allow a review of marketers’ margin.

The Executive Secretary revealed that the margins they received when fuel was sold for N40 per litre remained the same when it increased to N160 per litre and N200 per litre, respectively. He cautioned that it is unthinkable to believe that half of the petroleum marketing organizations currently in operation will cease to exist just because they are unable to pay taxes due to the weak margins.

Adewole stated that although petroleum marketers have extremely high turnover, they operate with poor profit margins.

Source: Oriental News Nigeria

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