FG affirms removal of VAT on cooking gas

The Federal Government has confirmed the removal of Value Added Tax (VAT) on Liquefied Petroleum Gas (LPG) in Nigeria, otherwise known as cooking gas.

This means that the cost of LPG, commonly referred to as cooking gas, will be relatively stable, thus attracting many investors and users in the country.

The Chairman, Federal Inland Revenue Service, FIRS, who disclosed this at the stakeholders’ meeting with Vice President Yemi Osinbajo, in Abuja, recently said the measure was targeted at growing the LPG sector.

The Federal Government had earlier in the year promised to remove VAT on cooking gas to encourage utilisation of the product in many households.

Osinbajo had explained that specifically, for household cooking, the present administration is targeting a 40 percent adoption rate (i.e. 13.8m households) in 5 years, and 73 percent adoption in 10 years (33.3m households).

“We believe that the sub-sector can create up to 2 million new direct and indirect jobs in Nigeria. Our determination to prioritise the LPG sector development culminated in the Federal Executive Council’s approval of the National Gas policy in 2017, with dedicated input for the enhancement of the LPG sub-sector. Our driving vision has been to transform the sub-sector from a commodity sector based on export to a value creation sector based on domestic utilisation and industrialisation,” he said.

The President, Nigeria Liquefied Petroleum Gas Association (NLPGA), Nuhu Yakubu said: “The Nigeria LP Gas Association is the umbrella body of all stakeholders in the LP Gas sector in Nigeria. The primary objective of the Association is to promote the use of LP Gas in Nigeria at affordable costs.

Findings by The Guardian had shown that LPG business will likely be boosted in Nigeria, as the Nigerian LNG Limited, a major local producer has indicated interest to increase supply, while demand for LPG is on the rise.

In a message obtained from its website, the company stated: “NLNG commenced the supply of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, to the domestic market in 2007 when refineries became challenged and supply was grossly inadequate. Since then, the issue of inadequate supply has become a thing of the past.

“The intervention, which is in line with company’s vision of helping to build a better Nigeria, has significantly contributed to the stimulation and development of the domestic LPG market in Nigeria and has effectively brought down the price of cooking gas from over N7, 000 in 2007 to less than N3, 500 per 12.5kg cylinder today.

“NLNG is committed to delivering 350,000 tonnes of LPG into the Nigerian market annually and has signed Sales and Purchase Agreements (SPAs) with fifteen off-takers (all Nigerian companies) for the lifting of LPG for the domestic market.”