Cooking gas price to crash as Federal Government removes VAT

Oil and gas experts have often argued that the VAT imposed on cooking gas makes the product more costly than imported brands from Niger and Equatorial Guinea

Adewale Sanyaolu

Indications emerged at the weekend that the Federal Government has finally succumbed to stakeholders’ pressure by removing Value Added Tax (VAT) on Liquefied Petroleum Gas (LPG) popularly called cooking gas. With this development, consumers should expect a crash in the price of cooking gas by about 20 percent. Currently, a 12.5kg bottle of gas sells for N4,300 and is expected to crash to N3,440 with the new policy.

Oil and gas experts have often argued that the VAT imposed on cooking gas makes the product more costly than imported brands from Niger and Equatorial Guinea, thereby discouraging many consumers from embracing the use of cooking gas.

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A source at the Nigerian National Petroleum Corporation (NNPC) said government has finalised talks with the Nigerian Liquefied Natural Gas (NLNG) and the Federal Inland Revenue Service (FIRS) to suspend further collection of VAT on cooking gas.

The source which did not confirm the date of implementation, assured that an official pronouncement would be made any time from now.

The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), has been at the forefront of championing the cause for the removal of VAT on locally produced cooking gas.

NALPGAM had said it was imperative to develop effective policies to encourage investors to come into the LPG sector to deepen market penetration, boost the country’s economy and protect the environment.

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According to the association, the removal of VAT on the gas supplied to marketers by NLNG would attract more investors and reduce importation of gas into the country, which is VAT-free.

It also advocated the need for the reduction of import duty on LPG equipment so as to encourage more investors to come in and deepen LPG consumption in the country.

“Our position is that the government has to provide the enabling environment for more people to come in. We have to remove VAT on LPG and reduce import duties on the equipment.

Meanwhile, NALPGAM has announced plans to deepen the use of LPG by assisting to increase local consumption from 700,000 metric tonnes to 1,000,000 metric tonnes yearly.

NALPGAM President, Mr. Nosa Ogieva-Okunbor, said if every stakeholder within the LPG value chain does what is right, the target would increase to about five million metric tonnes by 2025, adding that if achieved, Nigeria would have attained the league of nations with high level of LPG consumption.