The Nigerian government has abolished customs duty and value added tax (VAT) on imports of liquefied petroleum gas (LPG) and petroleum equipment, the local media reported, citing a letter from the Ministry of Finance.
"[...] The importation of LPG [...] 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 said.
This action is anticipated to lower cooking gas prices across the nation.
The Ministry of Finance revealed this in a letter addressed to 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), reports said. Wale Edun, the finance minister and coordinating minister for the economy, has reportedly signed the letter.
The ministry reportedly stated that the exemption aligns with President Bola Tinubu's pledge to improve Nigeria's investment environment and encourage the use of clean cooking methods.
“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 revealed.
Moreover, the government directed the FIRS and NCS to follow the order while it is being formally gazetted.
The ministry further instructed the NCS to revoke all debit notes given to petroleum marketers who imported LPG.
Additionally, LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators, LPG trucks, and other items were also freed from VAT and duty payments, the media outlets reported.
According to Olu Verheijen, the special adviser to the president on energy, the decision was made after stakeholder engagements indicated that investments in the LPG industry had been hampered by the absence of a clear fiscal directive. She reportedly conveyed this information while informing the chairman of the Nigerian Alliance for Clean Cooking of the exemptions in a separate letter dated November 30, 2023.
The adviser also said that the lack of investment had caused cooking gas costs to rise and the use of "unhealthy fuels such as kerosene" to increase.
This week, the Nigerian Dangote Oil Refinery, the largest in Africa, received its first crude feed. Among other things, the plant will produce 290,000 metric tons of propane/LPG annually.
The CEO of the Dangote Group, Aliko Dangote, stated to the local media that supplying fuel to Nigeria comes before selling it to other nations, including those in West Africa.