03/09/2012 (THISDAY Live) - The Federal Government may have finally approved the crash of import duties on vegetable oil coming into the country at the peril of local producers of the commodity, THISDAY has learnt.

THISDAY investigation revealed that the federal government may have finally yielded to pressure from importers of vegetable oil and manufacturers who require the commodity as a major input in their production process to crash the duty on the product; from an initial 35 per cent down to five per cent.

It was also gathered that government has been under intense pressure from interested parties, which include noodles producing companies in the country and other opportunistic traders, to reduce the tariff on imported vegetable oil, which they claim was in short supply in the country; with a demand-supply deficit of up to 700,000 metric tonnes per annum.

The federal government, according to THISDAY investigation, argued that the reason behind the tariff reduction was to help meet the local demand for vegetable oil  in the country, which it claimed currently stood at two million metric tonnes per annum; against a local production capacity of 1.3 million metric tonnes per annum.

Manufacturers in the country have however swiftly responded to the proposed policy change, warning that it would spell doom for the nation’s vegetable oil industry across the value chain.

Former President of Manufacturers Association of Nigeria (MAN) and council of the manufacturers’ umbrella body, Alhaji Bashir Borodo, warned the federal government not to take the step.

He explained that the move was being championed by smugglers as well individuals and organisations who got tariff waivers in the past to import crude vegetable oil for processing in-country, but rather went ahead to import finished vegetable oil with the attendant disruptions to the market.

“Federal government must not do this, because there is no rationale for it. Who gave them the statistics upon which they are taking this decision? It is just people playing on our intelligence for their own selfish interests. If it is done, forget about the vegetable oil industry in Nigeria; all small-scale farmers of various oil crops as well as small-scale processors will be entirely wiped out,” he said.

He noted that at the moment, medium and small-scale oil seed processors in the Northern part of the country have mostly closed shops, adding that they have been killed by the activities of the smugglers and tariff-free importers.

Borodo however stated that in the Southern part of the country, there was still hope but warned that if the federal government goes ahead with the policy, even the thriving oil-palm plantations in the South-south and South-eastern Nigeria would not be able to survive. “A lot of these oil-palm plantations and processing companies have borrowed huge amounts of money and have made heavy capital investments, and if such an obnoxious policy is introduced they will not be able to pay back these loans and they will fold up.

“We know who these people are who are championing this counter-productive policy. They are the people who used to get duty waivers for the importation of crude vegetable oil but who will turn around and import finished products. If this policy is introduced is will simply provide another opportunity for the fleecing of the already fragile Nigerian economy,” he warned.