The federal government has agreed to the removal of Value Added Tax (VAT) locally produced LPG from the Nigeria Liquefied Natural Gas company (NLNG). This action will make reduce the cost of locally produced LPG, making it more competitive against imported ones and also encourage investors to go into the manufacture of LPG in the country.
The VAT imposed on the LPG from Nigeria LNG has made the product costlier than the ones imported from other countries.
Billy Okoye, executive director, commercial of Petroleum Products Marketing Company, (PPMC) who disclosed this to BusinessDay on the sidelines of the annual general meeting of the Nigerian Association of LPG marketers in Lagos said that the Nigerian National Petroleum Corporation (NNPC) and the Federal Inland Revenue Service (FIRS) have resolved the issue.
“The issue of VAT on LPG from Nigeria LNG has been dealt with. I don’t want to pre-empt the government but I can assure you that the VAT on the product from NLNG is gone and the government would soon make a pronouncement on the issue soon.”
He said that his organisation has always been at the forefront of increasing the supply of LPG in the domestic market and stabilizing the price of the commodity in the country.
The president of the association has earlier on said that his group is making every effort to see that every household is able to afford LPG.
The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) has been lobbying the Federal Government to remove the Value Added Tax (VAT) on locally produced Liquefied Petroleum Gas (LPG), also referred to as cooking gas.
Nosa Ogieva-Okunbor, president of the association, while distributing about 500 cylinders free of charge to some consumers in Lagos 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.
He commended the government for setting up a committee to look at the issue of VAT on locally produced LPG which he said has pushed the product out of the reach of consumers
The price of 12.5 kg cylinder of cooking gas has risen from N 3, 800 in N4, 000. Similarly, the price of 6kg cylinder has risen from N 7, 900 to N 8,500, and 3kg from N 3, 200 to N 3,700.
According to him, the price of 20 metric tonnes (about 35,000 litres) of the LPG, which was N4 million has been increased to N4.6 million
Ogieva-Okunbor said the removal of VAT on the gas supplied to marketers by the Nigerian Liquefied Natural Gas (NLNG) would attract more investors and reduce importation of gas into the country, which is VAT free.
He also called for the reduction of import duty on LPG equipment in a bid to encourage more investors to come in and deepen LPG consumption in the country.
He said it was a shame that Nigeria remained one of the lowest consumers of LPG despite the enormous natural gas reserves 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 the LPG and reduce import duties on the equipment.”
“When this is done, more investors will come into the market and that will help the country a great deal,” he said.
