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Petroleum, Finance Ministries To Parley Over Tax Exemption for Imported LPG

The Ministry of Petroleum Resources has unveiled plans by it and the Ministry of Finance to meet over the continued exemption of imported Liquefied Petroleum Gas (LPG), or cooking gas, from Value Added Tax (VAT) payment.

Giving the hint during his interaction with journalists at a stakeholders’ meeting in Abuja, Brenda Ataga, a Senior Special Adviser to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said the planned meeting would critically appraise the exemption of imported LPG from VAT while locally produced one is taxed with a view to determining the appropriateness of otherwise of the fiscal regime.

According to her, government will be considering how Nigeria’s gas sector could be restructured to make it globally competitive and by so doing, support the current drives targeted at diversifying the nation’s economic base and boosting non-oil revenue.

The minister’s aide flawed the current fiscal regime which encourages the imposition of VAT on locally produced LPG by the country’s tax authorities while imported gas come into the country free of tax.

She explained: “LPG has zero import duties but there is VAT on domestic LPG and we are in discussions with the ministry of finance to balance that anomaly where imported gas has no VAT while domestic LPG has VAT.

“We are discussing that so that LPG can be a more competitive field and we are addressing the issue of pricing as well”, Ataga added.

According to her, a target has been set by the Ministry Of Petroleum Resources to ensure that Nigeria produce and supply up to five million tonnes of LPG within the next 10 years as against the  current 700,000 tonnes yearly production level.

Speaking on the possibility of LPG becoming an alternative fuel source the country, the minister’s aide pointed out that LPG could be an essential alternative to petrol; kerosene; diesel; auto-gas for transportation; as well as for cooking and power generation, amongst other energy needs.

She clarified: “The Nigeria Liquefied Natural Gas is one of major producer of LPG in the world. Nigeria stands at second largest producer behind Algeria (in Africa). With volumes like that, I don’t know why LPG is not available to the locals, we will be looking at the domestic supply obligations that frame how much LPG is being brought into the country.”


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