Steel duty waiver transparency in question as beneficiaries meet today
The Ministry of Finance will tomorrow meet with a few players in the steel sector who have been benefiting from import duty waivers amidst rising concern by stakeholders in the industry who are questioning the transparency of the Federal Government waiver process being championed by the Budget Office of the Federation.
The letter inviting the select few players emanated from the Budget Office of the Federation, an arm of the Federal Ministry of Finance and signed by the director general.
The interactive session coming up in Abuja will discuss the effect of concession on the steel sector and the economy, allegation of abuses of concession, investment position of companies, challenges if any and way forward/recommendations.
The meeting, according to some concerned industry players, who spoke unanimously to BusinessDay, is a ‘circuit meeting’ to endorse and cover up the rot surrounding the waiver granted to a company in the sector that has enjoyed over N12.9 billion in the month of January alone from everything they import, including tubes.
“They are merely gathering in Abuja to act a script they have jointly craftily put together,” our source said.
Western Metal Products Company Limited (WEMPCO), according to BusinessDay investigations, is a frontline beneficiary of duty waiver, a zero duty and VAT exemption concession granted for the importation of all plants and machineries as well as ancillary equipment, spare parts, tools and accessories for two years.
On June 15, 2007, the company got approval reference, a letter from the Office of the Permanent Secretary, Federal Ministry of Finance, Abuja, for special incentive package for the establishment of a $250 million cold rolled steel plant in Warewa, along Lagos-Ibadan Motorway, Ogun State. The approval, according to the letter, “is in line with the Federal Government drive for Foreign Direct Investment (FDI), especially in the steel sub-sector”.
This letter of approval was revalidated in a letter signed by the director general of the Budget Office of the Federation on July 15, 2008, to exempt WEMPCO from a suspension on waivers which came up after WEMPCO got its 2007 approval.
Hurt stakeholders drew the attention of BusinessDay to items on WEMPCO’s list covered by zero duty and VAT exemption which can be sourced locally. They include, among others, lamps and lamp holders, cables; fuses, relays, lamp holders, plugs and sockets; various electric lamps; electric wire and cable.
On the list for example, fuses, relays, lamp holders, plugs and sockets; various electric lamps; electric wire and cable are 1 million, 1 million and 2 million pieces, respectively! They also argued several of the items listed as construction materials are in no way whatsoever construction materials but items brought in free of duty and sold in the open market.
Other names of beneficiaries of duty waivers and VAT exemptions that feature prominently in import documents sighted by BusinessDay are Quits Aviation Limited and African Foundries Limited.
Fresh applicants for the booty include Monaplex Industries Limited of 16 Ikorodu Road, Ojota, Lagos, and Zarcon Manufacturing Limited of 383 Ikorodu Road, Ojota, Lagos. Monaplex Industries Limited applied for $120 million zero duty waiver and levy on November 19, 2012, for the establishment of cold rolling steel complex of 200,000 metric tons per annum capacity; Zarcon Manufacturing Limited applied also for zero duty waiver and levy on November 15, 2012, to establish a cold steel rolling mill complex valued at $100 million, with a 200,000 metric tons capacity.
Our source said these companies are currently canvassing for a 45 percent import tariff on cold rolling steel while they are pushing for a meagre 5 percent for themselves, a move described by some stakeholders as hypocritical.
“The initiative does not make economic sense since it boils down to the Federal Government helping the offending companies to build their plants whilst they are making a kill and milking the country dry”, the source said.
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