HomeViews and ReviewsContradictions In The LPG 'Gas' Conundrum

Contradictions In The LPG ‘Gas’ Conundrum

By

Ifeanyi Igwebike Mbanefo

Here we go again!

In 2019, we removed VAT on LPG in Nigeria, and reintroduced it in 2021 with implementation of 7.5 percent tax on imported LPG —exempting locally manufactured gas.

In 2021, Nigeria imported $327M in Petroleum Gas, mainly from United States ($284M), Equatorial Guinea ($17.6M), Guinea ($9.92M), Ghana ($8.35M), and United Kingdom ($3.7M).

All these countries rank below Nigeria in production of LPG. There was no need to import gas into Nigeria when the country’s gas powered many industries abroad and keep many homes warm.

Savings FX was a major reason for the 2021 tax.

The problem with LPG in Nigeria is not product scarcity, but absence of infrastructure.

Tax exemption for local players was meant to encourage investment in infrastructure.

To stop movement of products by heavy-duty vehicles that damage the roads.

To invest in pipeline gas, in storage facilities, in jetties and other gas infrastructure

Now that tax on imported LPG has now been removed, what next for this industry estimated at N100bn?

Everyone would return to trading rather making long term investment in infrastructure.

It is this type of policy volatility that drives investors away and makes a bad situation worse.

Nigerians are one of the lowest users of gas; majority use kerosene and fire wood which encourages deforestation and climate change.

Ironical that Nigeria, the country with the ninth biggest gas reserve in the world, continues to struggle to provide gas to its citizens because powerful traders continue to disrupt government policies that encourage long term investment.

Everyone wants quick cash.

IFEANYI, FORMER JOURNALIST AT THE GUARDIAN, AFRICAN CONCORD, DAILY INDEPENDENT, REUTERS AND AFP, IN 1998 JOINED THE NLNG, WHERE HE INITIATED THE NIGERIA PRIZE FOR LITERATURE AND THE NIGERIA PRIZE FOR SCIENCE, SPONSORED ANNUALLY BY THE ORGANISATION

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