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FG to review non-taxation of imported Liquefied Petroleum Gas to boost local content

Indications have emerged on the readiness of the federal government to reverse the prevailing policy that exempted value added tax (VAT) on imported Liquefied Petroleum Gas (LPG), or cooking gas, while the product that is produced in Nigeria is taxed.

This was made public by Brenda Ataga, a Senior Special Adviser to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu in Abuja in an interview with Business Hilights Abuja Bureau chief.

He said the ministries of petroleum resources and finance are currently on the issue and will release new taxing regulation on the negative imbalance.

Explaining more at a stakeholders’ meeting on how to adequately deepen the role of LPG in Nigeria’s domestic energy sector, Ataga said government was also looking into how Nigeria’s gas sector could be restructured to become more competitive and help her economic diversification from oil to gas as a sustainable energy source and revenue earner.

She explained that it was an anomaly that domestic LPG is consistently taxed by the country’s tax authorities, while imported gas come into the country free of tax.

Ataga averred that “LPG has zero import duties but there is VAT on domestic LPG and we are in discussions with the ministry of finance to balance that anomaly where imported gas has no VAT while domestic LPG has VAT”.

“We are discussing that so that LPG can be a more competitive field and we are addressing the issue of pricing as well.”

According to her, ahead of the imminent VAT review, “a target had been set by the ministry of petroleum resources to ensure that Nigeria produce and supply up to five million tonnes of LPG in 10 years as against the 700,000 tonnes that is currently being produced annually in-country”.

She noted that all efforts are being made to make LPG an alternative fuel source in Nigeria for energy security, Ataga added that LPG could be an essential alternative to petrol; kerosene; diesel; auto-gas for transportation; as well as for cooking and power generation.

She said “The Nigeria Liquefied Natural Gas (NLNG) is one of major producer of LPG in the world. Nigeria stands at second largest producer behind Algeria (in Africa). With volumes like that, I don’t know why LPG is not available to the locals, we will be looking at the domestic supply obligations that frame how much LPG is being brought into the country”.

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