4 days to handover: FG yet to revise waivers on cold-rolled steel

Manufacturers in the downstream segment of the basic metal, iron, steel and fabricated metal products sector are worried that four days to the end of Goodluck Jonathan’s administration, the Federal Government is yet to cancel import waivers on cold-rolled steel coils granted to upstream players.

In the basic metal, iron, steel and fabricated metal products sector, players in the upstream segment are assumed to be producing cold-rolled steel coils.

Cold-rolled steel coils are hot rolled steel that have had further processing at the factory. They are used for the manufacture of other metal products such as roofing sheets, all home appliances, metal furniture, desks, filing cabinets, shelves, tables and chairs, among others.

The assumption of the Federal Government is that the upstream players produce and then sell these cold-rolled steel coils directly to manufacturers in the downstream sub-sector, who then use them for further production of other metal products.

Hence, the waivers granted to those in the upstream segment are to allow them to import any shortfall (the demand gap) to complement what they have produced locally to meet the demands of the downstream segment.

While these upstream players are granted waivers, the Federal Government mandates downstream manufacturers that wish to import the cold-rolled steel coils for their factories to pay 20 percent import duty.

However, downstream players claim that those in the upstream, who are supposed to be producing these cold rolled steel, are either not producing or manufacturing for their own factories alone.

The downstream players say as the upstream segment does not produce for them as agreed, it amounts to injustice for the Federal Government to allow them to import wholly what they claim to manufacture locally at zero duty.

“It is unfortunate that they even import iron rods without paying duties,” said a source who is knowledgeable about the issue.

“You are creating a distortion in the market if you give one group this kind of unfair advantage over another group. How can you allow three companies that claim they produce cold-rolled steel free duty when they do not manufacture anything, and then ask those that import (because we cannot produce these cold-rolled steel here) to pay 20 percent duty. I have seen the agitation of the downstream and it is a justifiable protest,” the source, who wish not to be named, added.

Another source accused Ngozi Okonjo-Iweala, minister of finance and coordinating minister of the economy, as being responsible for the lopsided waivers.

“It is even worrisome that Olusegun Aganga, minister of industry, trade and investment, said he was not aware of the waivers given to the upstream segment,” the source, who identified the three upstream players as Western Metal Products Company (WEMPCO), Midland and Kam Wire, said.

BusinessDay investigations showed there was a fact-finding mission to cold-rolled steel coil and wire rod producers by the ministry of industry, trade and investment as well as representatives of the ministry of finance and the Manufacturers Association of Nigeria (MAN) earlier this month.

After the fact-finding mission, however, it was revealed that Wempco and Midland actually produce cold-rolled steel coils for their captive industries and sell some quantities to players in the downstream sector.

But the investigation equally showed that cold-rolled producers also act as end users, thereby making availability of the products to the downstream difficult.

BusinessDay further investigations revealed that the three companies earlier mentioned had a combined capacity of 440,000 metric tons, even though the gap between demand and supply was above 1 million metric tons.

The big question, therefore, remains how to actually and sincerely determine the quantity of cold-rolled steel coils imported into the country by the three players in the upstream.

BusinessDay further gathered that there was a meeting by the basic metal, iron, steel and fabricated metals group of MAN on April 30 this year. At the end of the meeting, it was agreed that all players in the cold-rolled industries could import the supply gap at 20 percent duty, as long as it was certified that they cannot get enough supply locally.

The members called for immediate cancellation of all the waivers and concessions granted to some members in the industry, insisting that such should be granted sectorally when necessary, amid consensus.

The group, BusinessDay investigations revealed, suggested various duties on imported products while rejecting zero percent duty on billets.

ODINAKA ANUDU