Oil Marketers Kick, Want 7.5% LPG Tax Scrapped

Peter Uzoho

The Major Oil Marketers Association of Nigeria (MOMAN) has kicked against the reintroduction of Value Added Tax (VAT) on imported Liquefied Petroleum Gas (LPG), commonly known as cooking gas.

While urging the federal government to rescind its decision by removing the 7.5 per cent VAT on the product, the group warned that the fee will hamper the adoption of gas in the country and create a barrier to the objectives of the ‘Decade of Gas’ agenda of government.

New Chairman of MOMAN and Chief Executive Officer of Ardova Plc, Mr Olumide Adeosun, made the call while fielding questions from journalists at a press conference in Lagos.

He said: “Unfortunately, we still don’t produce sufficient domestic LPG; so we are having to do a lot of imports and we are seeing a spike globally in the price of LPG. Domestically, what can we do? I think there have been discussions around the VAT that has been levied on the product.

“I think one of the big discussions that is going on right now is how that can be eliminated because the tax naturally creates a barrier to the objectives of the Decade of Gas, which is to increase the penetration and adoption of LPG, among other things, as an alternative to biomass. So, we are hoping that there will be some headway being made in that direction.”

THISDAY had reported that the price of cooking gas in Nigeria had maintained an upward swing, with the price of LPG skyrocketing to the extent that a 12.5 kilogramme of LPG was being filled with as high as between N6,000 and N7,000 in July and August 2021 respectively.

But marketers of the product had blamed several factors for the price hike, including inadequate in-country supply, inflation, foreign exchange scarcity/naira devaluation, and arbitrary charges by government agencies.
They however lamented that the recent addition of VAT to their expenditure basket has compounded the crisis in the LPG marketing, pointing out that they now spend no less that N8 million to import 20 million metric tonnes of LPG.

The MOMAN chairman however noted that the association must collectively be at the forefront of unravelling the opportunities associated with operating in the free-market structures that had been created by the Petroleum Industry Act (PIA).

He added that the association would continually advocate for changes that would positively impact the sector and the Nigerian economy.

“Making the transition to a fully competitive pricing oriented downstream sector will require the collective engagement and resolve of all stakeholders.

“The world around us is changing rapidly and the oil and gas industry has been proven to be one of the most exposed to the winds of this change,” he explained.

He said the association would continue sustained engagement and the creation of initiatives that would make the implementation of the PIA a shared success for all concerned parties.

“As you know, we were actively involved in the final drafting of the PIA and we have been able to iron out some of the thorny issues which are mainly on the aspects of implementation.

“For these issues, we have written to the minister of state for petroleum resources providing some guidance and our views on how the implementation can be effected and particularly within the time frame of about six months.

“So, we will be providing support to the government to ensure effective implementation of the PIA. We believe that it is critical that there should be a robust participation from market players in the implementation,” he added.