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Electricity Meters: Buhari Approves One Year Deferment Of 35% Import Adjustment Tax

President Muhammadu Buhari has considered and approved a one-year deferment of the 35 per cent import adjustment tax (levy) imposed on fully-built unit (FBU) electricity meters HS Code 9028.30.00.00.

According to a statement issued by Yunusa Tanko Abdullahi, Special Adviser (Media and Communications) to the Minister of Finance, Budget And National Planning, Zainab Ahmed, on Tuesday, the president’s approval is in consonance with the 2019 fiscal policy measures for the implementation of the Economic Community of West African States (ECOWAS) Common External Tariff (CET) 2017 – 2022.

The approval is specifically predicated on a request by Ahmed to support the Nigerian Electricity Regulatory Commission (NERC) in rolling three million electricity meters, under the Meter Asset Provider (MAP) framework.

Abdullahi noted that the request had cited a 35 per cent import adjustment tax (levy) which was approved in 2015 on the importation of FBU electricity meters which attracted 10 per cent import duty rate in the ECOWAS CET.

“The 35 per cent 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,” he said.

“An important feature of the MAP regulation is a gradual up scaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 per cent with the potential of significant job creation in the area of meter assembly, installation and maintenance.”

President Muhammadu Buhari

Abdullahi noted that this is in consonance with Section 9 of the MAP regulations that MAPs shall source a minimum of 30 per cent of their contracted metering volumes from local meter manufacturing companies in Nigeria.

The minister’s spokesman also disclosed that changes to the minimum local content thresholds shall be as specified in the NERC local content regulations.

“However, the application of the 35 per cent levy on electricity meters – HS Code 9028.30.00.00 has created a significant challenge to the smooth implementation of MAP scheme of NERC,” he stated.

“Even though the 35 per cent was in existence since 2015, the MAP regulations by NERC in 2018 to bridge current electricity metering gap, did not factor the 35 per cent levy in arriving at the regulated cost of electricity meters to end-users (consumers).”

Consequently, 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 been captured to have indicated interest for electricity meters, Abdullahi said.

“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 roll out,” the minister’s spokesman continued.

“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 the sourcing of electricity meters, the government had approved that 50 per cent of the current demand for electricity meters be considered for importation at the ECOWAS CET import duty rate of 10 per cent zero levy.

“This 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.”

Meanwhile, all deposit money banks (DMBs) are required by the Central Bank of Nigeria (CBN) to “immediately implement certain actions in collaboration with their customers (DisCos), which is in line with a directive of the Power Sector Coordination Working Group to improve payment discipline in the Nigerian Electricity Supply Industry (NESI) and thereby boost the overall quality of electricity generation, transmission and distribution” according to Abdullahi.

“The actions are targeted at ensuring that banks providing bank guarantees to the Nigeria Bulk Electricity Trading (NBET) Plc and the Transmission Company of Nigeria (TCN), on behalf of Discos, would take full responsibility for: The collections of the concerned DisCos, and the remittances of the DisCos to both NBET and TCN,” he added.

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