Again, the federal government has removed imported Liquefied Petroleum Gas (LPG), also known as cooking gas and its associated equipment from the list of payment of customs duty and Value-added Tax (VAT), two years after its reintroduction.
It was learnt that the move is expected to result in a drop in the cost of cooking gas which had recently skyrocketed nationwide.
The new policy was disclosed in a letter dated November 28, 2023, written by the ministry of finance in an official communication with the special adviser to the president on energy; the comptroller-general of the Nigeria Customs Service (NCS); and the chairman of the Federal Inland Revenue Service (FIRS).
The letter seen by theCable was signed by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun.
In 2019, the federal government had removed VAT on LPG in Nigeria, with the then Chairman, FIRS disclosing at a stakeholders’ meeting with the former Vice President Yemi Osinbajo, in Abuja, that the measure was targeted at growing the LPG sector. It was then reintroduced in 2021.
But in the latest instance, the ministry said the exemption aligned with President Bola Tinubu’s commitment to enhancing Nigeria’s investment climate, and promoting clean cooking practices.
“In line with His Excellency, President Bola Tinubu’s commitment to improving the investment climate in Nigeria, increasing the supply of LPG to meet local demand, reducing market prices and promoting clean cooking practices, I hereby affirm presidential directive dated July 29, 2022, with reference number PRES/88/MPR/99.
“Accordingly, the importation of LPG utilising HS Codes 2711.12.00.00, 2711.13.00.00 and 2711.19.00.00 is exempt from import duty and Value-Added Tax. Consequently, the Importation of LPG shall incur a 0 per cent duty rate and 0 per cent VAT rate, effective immediately,” the letter stated.
The ministry instructed the NCS and FIRS to comply with the directive pending its official gazetting.
Also, the ministry directed the NCS to comply with the presidential directive, dated July 29, 2022, and withdraw all debit notes issued to petroleum marketers who have imported LPG “using codes 2711.1.2.00.00 and 2711.13.00.00 from August 26, 2019, to the present date”.
Other items exempted from VAT and duty payment were LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, LPG trucks, among others.
The Special Adviser to the President on Energy, Olu Verheijen, said the decision was prompted after consultations with stakeholders revealed that the lack of a clear fiscal directive had hindered investments in the LPG sector.
The report said she spoke while informing the chairman of the Nigerian Alliance for Clean Cooking of the exemptions in a separate letter, dated November 30, 2023.
Verheijen said the paucity of investment had led to a rise in the prices of cooking gas and an uptick in the use of “unhealthy fuels such as kerosene”.
After reintroducing the tax in 2021, the federal government had commenced implementation of the 7.5 per cent tax on imported LPG, exempting locally manufactured gas.
Earlier, the Minister of Petroleum (Gas), Ekperikpe Ekpo, had also in a meeting to curb the rising gas prices, urged International Oil Companies (IOCs) and other producers to fulfil their domestic obligations before export.
At a meeting in Abuja, Ekpo told the producers that Nigeria had to find a way to surmount the challenges in the country’s domestic market, expressing Tinubu’s concerns over how unaffordable the product was becoming.
The intervention came as the
National Bureau of Statistics (NBS) in its latest report, said that in October LPG prices rose by as much as 14 per cent for a 12.5 kg tube during the month.
Ekpo said the intervention on the LPG issue, followed the rise in recent months in the price of the product per kg from about N700 to above N900 in some parts of the country.
Key challenges identified as responsible for LPG price increase, Ekpo said, included FX sourcing for imports and insufficient supply to the domestic market by producers.
