The Federal Government (FG) has removed VAT and customs duty payments from cooking gas imports. This is according to a letter written to several government agencies.
The Cable reports that the federal government has decided to waive customs duty and value-added tax (VAT) on the importation of liquefied petroleum gas (LPG) also known as cooking gas and its associated equipment. This action aims to bring down the cost of cooking gas across the country.
The Ministry of Finance conveyed this decision in a letter dated November 28, 2023, addressed to several officials including 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).
Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, signed the letter.
A part of the letter read:
“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,” the letter reads. “Accordingly, the importation of LPG utilizing 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% duty rate and 0% VAT rate, effective immediately.”
According to the Cable, the ministry also directed the Nigerian Customs Service 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 are LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, and LPG trucks, among others.
Prior to the letter issuance
Recall that two weeks ago, Ekperikpe Ekpo, the Minister for Petroleum Resources (Gas) conveyed President Bola Tinubu’s worries about how much more expensive cooking gas has become and how this is making life tough for most people.
He pointed out that Nigeria has a lot of gas, but it’s not right that some big companies prefer to sell it overseas instead of making sure there is enough supply for the domestic market.
He emphasized that the government needs to step in because the prices of cooking gas are shooting up like crazy, and dealing with bringing it in and sending it out is a big challenge.
To fix things up, the minister put together a team. Their job is to figure out, in just a week, how to get more cooking gas to Nigerians and make it cheaper.
Note that in Abuja, people were paying around N11,800 on average to refill their 12.5kg gas cylinders as of December 8.
When it comes to the cooking gas we use in the country, 40% comes from the Nigerian Liquefied Natural Gas (NLNG) Limited, but the other 60% is brought in from other countries. The price of this gas is connected to how much the Naira is worth compared to the Dollar. So, if the Naira gets weaker against the Dollar, the price of cooking gas goes up. Right now, on the black market, the exchange rate is N1200 for a single dollar as of December 9.
In 2019, the FG had removed VAT on LPG in Nigeria.
However, reintroducing the tax in 2021, the FG commenced implementation of the 7.5 percent tax on imported LPG – exempting locally manufactured gas.
