Statistics released by the Nigerian Bureau of Statistics show that the Federal Government (FG) has systematically dropped the quantity of kerosene imported to 34.14 million liters in September, representing a 60.3% drop from the 86.03 million liters it imported 5 months earlier in May.
The reasons for this drastic reduction by the FG is to motivate Nigerians to use domestic Liquefied Petroleum Gas (LPG) commonly known as cooking gas instead of kerosene. The FG does not see why Nigerians should use kerosene imported at great cost instead of the locally produced cooking gas which can be accessed cheaply.
In addition, Nigeria had one of the largest gas reserves in the world and the Buhari administration is committed to unlocking the domestic LPG value chain. As proof of this, the government recently constituted an inter-ministerial committee to expand the use of the LPG, chaired by Osinbajo.
The allure of this for the FG is two-fold. First, the $1 billion the FG claims it spent on subsidy last year will be saved into the government coffers. Secondly, an increased consumption of the locally produced cooking gas will stimulate the local LPG value chain as emphasized by the Federal Government.
The policy direction of the FG however has challenges inhibiting its successful implementation. For example, cooking gas is usually seen by Nigerians as elitist and expensive, thus reducing potential demand. Also, the FG’s decision to impose value added tax (VAT) on the LPG produced in the country while the imported product was granted waiver is seen as contradicting the desired use of local LPG as it increases its price.