The Finance Acts of 2019 and 2020 featuring a significant number of tax reforms, waivers, and incentives across major sectors of the economy has in no small measure doubled as a catalyst for other sectors not captured to demand for relief packages, intending to boost sectoral activities.
The lastest sector to register its need for a relief package is the fourth estate of the realm particularly, the newspaper industry. The ‘all-important’ industry wants the Federal Government to grant it tax relief on newsprints imported. It is important to note that since the defunct Oku-Iboku Newsprint Mill in Nigeria several years ago, newsprint manufacturing in the country has struggled with major setbacks, necessitating newspaper firms to opt for the importation of these materials.
The Chairman and Publisher of the Guardian Newspapers, Lady Maiden Alex-Ibru during a recent book presentation titled ‘The Making of the Nigerian Flagship: The Story of the Guardian,’ held at the Balmoral Hall of the Federal Palace Hotel in Lagos described tax in the industry as choky.
Standing as the mouthpiece of the Newspapers Association of Nigeria, the Guardian publisher hammered on the need for a stimulus package in terms of tax holiday and duty-free package for newsprint imported for daily publication.
To further describe the weight of importing newsprint on its profit margin, The Guardian Newspaper Proprietor laments that,
“It has not been easy for all of us; newsprint, the most expensive raw materials for printing newspapers are imported from Europe and the implication is that tax is killing the newspaper industry. We appeal for a relief package in this area.”
Displeased by the development, the Senate recently set up a Committee on privatisation led by the former Governor of Abia State, Theodore Orji, to look into the moribund paper mills in Nigeria. The committee is mandated to investigate the remote and immediate causes of the collapse of the paper industry across the country to come up with a sector-specific policy.
Key issue in the industry
Commenting on the mills, the Minister of Industry, Trade and Investment, Otunba Richard Adebayo Adeniyi noted that the industry was suffering from a lack of robust and adequate guidelines for the development of the sector in Nigeria.
Going down memory lane
- AS of 1990, the Oku-Iboku plant produced 37,581 metric tonnes of newsprint, which reduced the country’s importation by 12.7 percent. It was, however, shut down in 1993 before its completion and consequently privatised. The mill, which had produced 42,960 tons of kraft paper as of 1986, was the biggest in the country then.
- The Nigerian National Paper Manufacturing Company (NNPMC) was planned to produce fully bleached pulp for the production of 68,000 tons of various grades of fine writing, printing, and cultural papers every year, but the plant has, from its pre-privatisation to post-privatisation era, so far produced for only six months.
- NNPMC, formerly Iwopin Pulp and Paper Company (IPPC), located in Ogun Waterside Local Government Council of Ogun State, was established in 1975 under the Companies Act of 1968 and was incorporated under its present name on December 17, 1992, as a private limited liability company to produce quality bond paper and pulp in the country and for the West African sub-region. It began commercial production in February 1995.
- Despite the commissioning of the first phase of the mill in 1994 as a result of the joint venture collaboration with Wittermore Paterson Investment BV of Germany, no production took place. There were efforts to run the mill on imported raw materials on one of the paper machines, but to no avail, as inadequate electricity supply stalled the process in 1998.
- The plant, to date, is not connected to the national grid. The high cost of diesel was one of the factors responsible for its initial failure, as it took the company approximately 52,000 litres of diesel per day to operate.