FCCPC: How Generator Importers Engage in Price Fixing, Shortchange Government in Duty Payment

The Executive Vice Chairman and Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), Mr. Babatunde Irukera, said the commission has discovered some anti-free market practices such as price-fixing being perpetrated by some importers and sellers of generating sets in the country.

Irukera said through its intelligence gathering, the commission also discovered that some of the companies also shortchange the government in the payment of duty for imported generator spare parts.

The FCCPC boss, who stated these during an interview on Arise News Channel, added that the enactment of the Bank and Other Financial Institutions Act (BOFIA) 2020 has limited the power of the commission on the Nigerian banking industry in dealing with bank customers’ complains against their banks.

He said some of the companies importing and selling generators in the country took undue advantage of the opportunity provided by the government through the exemption of duty payment on imported Completely Knocked Down parts (CKDs) of generators, which was intended to boost alternative energy and increase the affordability of generators for consumers.

Irukera explained that that policy was part of the ways government wanted to help address grid power generation, transmission and distribution deficits in the country so that people could have alternative means of power supply at an affordable price.

He said, “The list that society should experience is that the candle didn’t burn from both end and they are not shortchanged even with respect to the cost of providing the alternative power, which typically is now renewable energy, but primarily generators.

“So we got credible intelligence that in the generator sector, there were few things that were going wrong. Number one, in order to address the generation, transmission and distribution deficits, one of the things the government has done is to relax certain rules with getting your own alternative power.

“One of them is reducing or even eliminating duty with respect to CKDs, which are Completely Knocked Down parts to build a generator, and so, most generator importers bring in this Completely Knocked Down parts and then assemble.

“That does two things: the lack of duty makes it more affordable for the consumers, and then, it also promotes the local industry in the sense that at least, it brings the value-adding process to be done domestically, which is the assembling.”

Irukera maintained that while the spare parts continue to attract duty, the commission later discovered that “there were some businesses that would import few engines in a container that would be dominated by spare parts and portray that as Completely Knocked Down parts, thereby paying far less duty than they should.”

In collaboration with the Nigerian Customs Service (NCS), he noted that they were able to get some data about some of the containers that had moved which yielded some information to them.

On the alleged price fixing by the companies, Irukera explained that the council also discovered that there were some level of coordination where some companies were talking with themselves and agreeing by signaling on how the prices moved, saying such practice distorts the free market.

“So with all that information that we had, we presented that to the Judge of the Federal High Court and when the judge was convinced, the judge issued a search warrant, an order for us to execute and that’s what we did.

“We executed a search warrant simultaneously on multiple operators in the industry at the end of last year. Usually, an investigation of this nature takes quite a while because you now have to start slicing the information that you have got. Certain terabytes of information was downloaded from their computers, their emails and telephones and so, we are analysing that information”, he added.

However, the FCCPC boss also revealed that the enactment of BOFIA in 2020 has limited the power of the commission on the Nigerian banking industry in dealing with bank customers’ complaints against their banks.

According to him, what the law did was to exclude the FCCPC Act from the banking industry, meaning that the oversight work that FCCPC does with resolving complaints in the financial institutions became limited.

“So, essentially, the real statutory platform for resolving that banking complains is now the central bank exclusively. However, because banking constitutes the second largest complaints we receive, what we have done at the FCCPC is to continue to do the work in the banking sector based on an understanding that withdrawing that channel would absolutely be chaotic.

“And so, we’re struggling with having the statutory tools to deal with the banking sector as we used to. And one of the results of this is that we don’t have the visibility that we would have to be able to contribute to policy and execution of policy in a way that would truly and fully capture what we know based on our experience in dealing with banking customers and what we understand the landscape of the industry to be”, Irukera said.

He maintained that the commission however continues to resolve complains on a daily basis and that they receive hundreds of complains weekly.

“But what FCCPC can do based on the limitation on the statutory instrument is to at least get the banks to address what the issue is.

“With respect to the question on penalties, the kind of statutory power to penalise inappropriate conduct is still questionable,” he added.

Peter Uzoho

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