In a bid to reduce the cost of cooking gas in the country, the Federal Government of Nigeria has announced the removal of customs duty and value-added tax (VAT) on the importation of liquefied petroleum gas (LPG), commonly known as cooking gas, and its associated equipment.
The decision was conveyed in a letter dated November 28, 2023, signed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.
The letter, addressed to key 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), affirms President Bola Tinubu’s commitment to improving the investment climate, increasing LPG supply to meet local demand, reducing market prices, and promoting clean cooking practices.
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“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.
The directive exempts the importation of LPG, utilizing specific HS codes, from import duty and VAT. Effective immediately, the importation of LPG will incur a 0% duty rate and 0% VAT rate.
“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,” the letter added.
The ministry has also directed the Nigerian Customs Service to comply with the presidential directive and withdraw debit notes issued to petroleum marketers who have imported LPG within a specified timeframe.
Additionally, the letter outlines other items exempted from VAT and duty payments, including LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, and LPG trucks, among others.
This move follows recent concerns raised by the Minister for Petroleum Resources (Gas), Ekperikpe Ekpo, about the rising cost of cooking gas in Nigeria. He emphasized the need for government intervention to ensure sufficient domestic supply and affordability. The government aims to address these challenges promptly through strategic measures and collaboration with industry stakeholders.
The Ministry of Finance also directed the Nigerian Customs Service to comply with the presidential directive and withdraw all debit notes issued to petroleum marketers who have imported LPG using specific codes from August 26, 2019, to the present date.
This decision comes in response to concerns raised by Nigerians over the rising cost of gas. A 12.5 kg cooking gas costs about N13,000 in Lagos. The Nigerian Bureau of Statistics (NBS) highlighted in its October Consumer Price Index (CPI) report that the average retail price for refilling a 5kg cylinder of cooking gas surged by 8.89 percent month-on-month. This increase took the price from N4,189.96 in September 2023 to N4,562.51 in October 2023, marking a 14 percent rise.
The decision to remove VAT and customs duty on cooking gas imports is expected to contribute to lowering the cost of cooking gas and making it more accessible to the Nigerian populace.