Nigeria Abandoned Implementation of VAT on Imported Cooking Gas — Marketers
By Chibisi Ohakah, Abuja
The Nigerian government has not implemented the Value Added Tax (VAT) on imported Liquefied Petroleum Gas (LPG) as planned. The government had in 2019 gazetted the removal of VAT on LPG (better known as cooking) to increase the product’s use nationwide.
Some marketers of LPG, who reacted to the decline in the price of the product across the country said government was still charging VAT on cooking gas. They said government had in July 2021 notified them about the reintroduction of VAT on the product as the government moved to shore up its revenue sources.
The executive secretary, Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr. Bassey Essien, called on the federal government to revisit the matter, and clarify its position on the issue.
“The announcement that the government was reintroducing VAT on imported LPG created panic in the market which led to the hike we experienced in the prices of cooking gas in 2021.
“Some marketers stopped importation, and don’t forget that about 60% of LPG consumed in Nigeria is imported. The NLNG only supplies about 450,000mt and our LPG consumption is over one million metric tonne, so imposing VAT on imported LPG affected the market,” he said.
He however noted that despite the announcement, government is yet to begin a collection of VAT payment, which has encouraged more marketers to restart importation.
The Association secretary said the impact was currently being felt like the prices of cooking gas had reduced from about N10,000 and N10,500 for a 12.5kg gas cylinder to about N7,400 and N9000, across the country.
Also supply has increased and as it continues, the prices will continue to decline but it is still a far cry from where we are coming from.
“In January 2021, a 20 metric tonne truck was about N4 million but it is currently about N9.7 million. We have to look at all the factors that drove the prices up including LPG demand in the international market and find a way to domesticate LPG supply to ensure price stability,’’ he said.
In a chat with the News Agency of Nigeria, national chairman, Liquefied Petroleum Gas Retailers (LPGAR), branch of National Union of Petroleum and Natural Gas Workers (NUPENG), Michael Umudu, said the decline in the prices of cooking gas was a welcome development.
“We as retailers suffered so much because many of our customers switched to charcoal and firewood because they could no longer afford to buy gas. Now, supply is increasing and we are hoping that if it is sustained, there will be further reduction in the price of cooking gas.
“We learnt that the government has not implemented the VAT policy but the pressure that the pronouncement brought to the industry led to the hike in the price of LPG.
“We want the government to come out openly to say that they have removed VAT on imported LPG so that there will be stability,’’ Imudu said.
He emphasized the need for the government to encourage more Nigerians to embrace gas because of the attendant health benefits to the nation. “Government has announced many policies aimed at deepening gas utilization such as the Decade of Gas Development initiative and the National Gas Expansion Programme.
He said that these programmes need to be workable and not just on paper. “There needs to be infrastructure on the ground to support their implementation,’’ Mr. Umudu added.