Olusola Bello
Owing to the cries of the general public and other stakeholders over the continued increase in the price of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, the Federal Ministry of Finance has summoned a meeting of all stakeholders, including the Nigeria Customs Service (NCS) whose actions have of recent exacerbated the increase in the price of the commodity.
The meeting has been slated for Wenesday15, September 2021 at the Ministry of Finance Abuja.
A copy of the letter addressed to the Comptroller General, Nigeria Customs Service with reference no F.17981/65, dated 8th September 2021 and signed by Director Technical Services, Hajia Fatima Hayatu for the honourable minister of Finance, Budget and Planning was titled: “Re: Classification On Exemption From Payment Of Import Duty And Value Added Tax On the Imports Liquefied Petroleum Gas and Classification of LPG In The Common External Tariff CETI Document.”
A sub title supporting the above reads thus: “Re: Review of Tariff For the Liquefied Petroleum Gas LPG Subsector.”
The letter stated that: “I am directed to refer to the letters from Liquefied Petroleum Gas marketers, messrs Matrix Energy Limited, Prudent Energy and NIPCO plc and the Ministry of Petroleum Resources on the above subjects and to invite the Service to a meeting.”
According to some of the stakeholders spoken to by Business Standards, they express optimism that the meeting would address the issues that have led to the recent increase in the price of cooking gas.
The commodity according to industry sources was not one of those on the list of items that government collects import duty and VAT on, but the Nigeria Customs Service recently came up with such taxes on the commodity. An exercise that has dire consequences on the government’s poverty alleviation programme.
To further worsen the situation, the Nigeria Customs Service decided to backdate the import duty payment thereby making it impossible for the importers to import the product. Some of the importers are asked to several billions of Naira as arrears.
Failure to pay the arrears according industry source would lead to the closure of their import portal by the NCS. Meaning that they would not be able to import cooking gas until the arrears are settled.
Recently the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, gave reasons why the price of cooking gas is high.
According to him the challenges in sourcing adequate supply of cooking gas has led to the increase in prices of the commodity.
He said: “Today, this country is under supplied with gas. I can tell you that we are having difficulty feeding our network across the country with gas, every day; it is a trouble to deliver gas. Once your supply is weak, it will affect pricing”, the NNPC GMD said.
He stated that the supply mechanism of our LPG is very weak, that is why NNPC and other are collaborating extensively to make sure that they are able to extract LPG from our gas resources so that it is made available to the market. Once supply becomes high, definitely, the price will definitely be impacted.
He, however, said the corporation is working with other sister agencies to make sure that more gas is available into the domestic market thus, making it close to homes.
According to him, its strategy to expand its network of availability would subsequently lead to gas directly delivered to homes of end users.
He said: “If we do this, all cylinders will not be of any use. That is why I don’t see them used in many developed countries. When we are able to power thermal gas plants across the country and very close to the users, ultimately, homes will be run with electric cookers and utensils and that way, you will have less need for cylinders. We are transiting and we will continue to add more volume into the market so that we bring down the prices.”
Some Nigerians may go back to traditional method of cooking as price of Liquefied Petroleum Gas because of the price of the commodity.
The 7.5 percent Value Added Tax [VAT] policy on imported cooking gas the Federal Government started to implement couple with the introduction of import duty are some of the major factors responsible for the increase.
The price of cooking gas jump by over one hundred percent since December 2020 across the country.
According to the National Bureau of Statistics in its August 2021 report on Liquefied Petroleum Gas it put the average price to refill 5kg cylinder of cooking gas increase 3.52% month on month and by 8.64% year on year.
Also the average price to refill 12.5kg cylinder of cooking gas also increase by 3.11% month on month and by 7.16% year on year.
The National Bureau of Statistics stated that the states that get the highest average price of refilling 5kg gas are Akwa Ibom, Benue and Bauchi states.
While the states that get the lowest average price to refill 5kg gas were Abuja, Ondo and Lagos states.
From N4800 for the price of a 12.5 kg earlier in the year to almost N9000 now.
