FG introduces cooking fuel import tax, worth jumps by 100%

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The federal government has introduced a 7.5 percent tax on imported liquefied petroleum gas, popularly known as cooking gas, as the cost of the raw material increases by over 100 percent within eight months.

As announced on Sunday, the government introduced VAT on LPG imports about three weeks ago, and some traders have also been hired to pay taxes on goods imported a few months ago.

The operators told our correspondent that Nigeria imports about 70 percent of the raw material, while the rest was mainly supplied by the Nigeria Liquefied Natural Gas Company.

It was also found that the cost of 12.5kg of cooking gas, which was sold for about 3,500N in December 2020, had increased to 6,800N in parts of Abuja.

A local resident along the Lagos-Ibadan road said she bought the goods for N7,200 in Lagos on Sunday, as traders forecast the cost could reach N10,000 by December this year.

Operators said development has led small businesses and homes in rural and semi-urban areas to resort to firewood and charcoal as cooking gas purchases have plummeted in recent months.

Liquefied Petroleum Gas Retailers Association of Nigeria national chairman Michael Umudu said there were three factors that caused the price spike.

He said, “There are three main factors behind the price increase. First, around 70 percent of the gas we use in Nigeria is imported, and importers are faced with high foreign exchange costs.

“Secondly, the prices of petroleum products are increasing on the international market and therefore the cost of LPG has also increased. So importers are now paying more for imports.

“And thirdly, about three weeks ago, the government levied VAT on imported LPG. It (VAT) was 7.5 percent of the price of the goods and this has exacerbated the rise in the price of cooking gas in the past three weeks. ”

Umudu said that before the introduction of VAT, the exchange rate and the cost of petroleum products were the factors that increased prices in the international market.

“Around November / December last year, 12.5 kg was sold for around 3,500 N, but in July it rose to around 5,500 N and when VAT was introduced about three weeks ago it has now risen to around 6,500 N and more . “he stated.

Umudu added, “The price hike seems to be happening on a daily basis and no one can say when it will stop. Much appeals have been made to the government to find a way to convince NLNG to increase its domestic supply in order to make the product affordable.

“NLNG provides about 35 percent of the gas we use on site, and that percentage is not enough. And the gas sold by NLNG is even sold at international prices and is quoted in dollars rather than naira. “

Regarding the cost of the raw material in metric tons, Umudu replied: “20 MT is now around N8 million on average. And before VAT was introduced, the price for 20 MT was around N 6.8 to 7 million, which was the highest at the time Price was. ”

He noted that as a result, the use of firewood and other alternative energy sources has increased these days.

“When you come to Lagos, you see piles of firewood like peanut pyramids. Many people who use LPG to run their small businesses can no longer cope with it because of the price. You are in a crisis right now; some of them are now using firewood, others are using charcoal, ”he said.

Umudu added, “Many people in rural and semi-urban areas drop their bottles. Those who find it difficult to get alternatives actually have a very difficult time. ”

The executive secretary of the Nigerian Association of Liquefied Gas Marketers, Bassey Essien, also said on the matter that the cost of 12.5 kg of gas in December could be N 10,000.

He said, “If they (the government) don’t take the time by December to handle this increase, it will be N10,000 (12.5 kg). It’s not us, it’s the government. We sell what we get. ”

What could be done, he replied: “The amount we produce in Nigeria is only about 40 percent of total consumption; the rest is imported. And you don’t have a forex window for these people to import gas.

Second, you suddenly woke up and said you wanted to start VAT on imported gas, which was abolished a few years ago. And now you have not even started over, but said it will be in retrospect, starting a few months ago. ”

He added, “And you levy billions in taxes on gas imports, for example you ask a company to pay around N4 billion in tax. If you pay this money now, someone else will have to bear these costs. ”

Speaking of government action on development, Nigeria’s National Petroleum Corporation spokesman Garba-Deen Muhammad said the Minister of State for Petroleum Resources Chief Timipre Sylva said the raw material was deregulated.

Muhammed, who served Sylva as media advisor before he recently moved to the NNPC spokesman, said: “The minister answered this question during his last press conference two weeks ago.”

At the briefing, Sylva had said, “We are unable to set gas prices because gas is not a regulated product. But of course we’re also very worried that prices will go up, and that’s why I’m actually doing something about it, in the interests of the ordinary Nigerian.

“I’m calling some of the suppliers to discuss the reason for this hike.”

He added that the intervention was outside the role of the government.

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