Oil marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) have protested the Federal Government’s reintroduction of Value Added Tax (VAT) on imported Liquefied Petroleum Gas (LPG), commonly known as cooking gas.
This follows the spike in the global price of LPG which is largely imported into the country and the inclusion of VAT to the already high price which negate the government’s policy on the adoption of LPG.
The association, who are major stakeholders in the downstream sector of the oil industry asked the federal government to rescind its decision by removing the 7.5% VAT on the product, warning that the fee will hamper the adoption of gas in the country and create a barrier to the objectives of the ‘Decade of Gas’ agenda of government.
This disclosure was made by the new Chairman of MOMAN, who is also the Chief Executive Officer of Ardova Plc, Mr Olumide Adeosun, during an interaction with journalists at a press conference in Lagos, according to ThisDay.
What the Chairman of MOMAN is saying
Adeosun said, “Unfortunately, we still don’t produce sufficient domestic LPG; so we are having to do a lot of imports and we are seeing a spike globally in the price of LPG. Domestically, what can we do? I think there have been discussions around the VAT that has been levied on the product.
“I think one of the big discussions that is going on right now is how that can be eliminated because the tax naturally creates a barrier to the objectives of the Decade of Gas, which is to increase the penetration and adoption of LPG, among other things, as an alternative to biomass. So, we are hoping that there will be some headway being made in that direction.”
The MOMAN chairman pointed out that the association would continually advocate for changes that would positively impact the sector and the Nigerian economy.
He explained, “Making the transition to a fully competitive pricing oriented downstream sector will require the collective engagement and resolve of all stakeholders.
“The world around us is changing rapidly and the oil and gas industry has been proven to be one of the most exposed to the winds of this change.’’
What you should know
- Recall that the Department of Petroleum Resources (DPR) and oil marketers have been at loggerheads over the decision of the Federal Government to reintroduce 7.5% VAT on imported LPG popularly known as cooking gas.
- The government had in 2019 gazetted the removal of VAT on cooking gas, as a product to increase its domestic utilization.
- However, the Director of DPR, Sarki Auwalu, had said the government had to re-impose VAT on imported LPG to attract investments to local gas production.
- Investigation in the market shows that the price of cooking gas in Nigeria had been on an upward swing, with the price of LPG skyrocketing to between N6,000 and N7,000 in July and August respectively for a 12.5 kilogramme of LPG.
- The marketers of the product had blamed several factors for the price hike, including inadequate in-country supply, inflation, foreign exchange scarcity/naira devaluation, and arbitrary charges by government agencies adding that the recent addition of VAT will compound the crisis.