The Liquefied Petroleum Gas Retailers Association of Nigeria, has linked the recent surging market price of Liquefied Petroleum Gas (LPG) to fiscal policy measures of the Federal Government, particularly the imposition of a 7.5 percent Value Added Tax (VAT) on imported gas and the waning value of the Naira in the foreign exchange (forex) market, amongst other factors
The National Chairman of the retailers association, Michael Umudu, was quoted in a news report by The Punch as saying that the commencement of the VAT on LPG imports about three weeks ago and prior payments by dealers before then triggered the commodity’s surging market price.
LPG marketers hinted that about 70 percent of the local demand for LGP is still being imported with the Nigeria Liquefied Natural Gas (NLNG) covering the demand gap.
Currently, the cost of a 12.5kg of cooking gas which sold for about N3,500 last December had risen to between N6,500 and N6.800 in parts of Abuja while the same is exchanging for between N7,000 and N7,200 in Lagos, Ibadan, Benin and other big cities.
Commenting on the rising LPG price, Umudu was quoted as saying that three factors accounted for the rising price of the commodity.
He explained: “There are three major factors to the hike in prices. Firstly, about 70 per cent of the gas we consume in Nigeria is imported and importers have to contend with the high cost of foreign exchange.
“Secondly, there is a rise in the price of petroleum products in the international market and because of that, the cost of LPG has equally gone up. So importers now pay more on imports.
“And thirdly, the government added VAT on imported LPG about three weeks ago. It (VAT) was 7.5 per cent of the cost of the commodity and this exacerbated the price hike of cooking gas in the past three weeks”, he added
According to him, before the introduction of VAT, foreign exchange and cost of petroleum products in the international market had been the factors causing the rise in price.
The marketer further clarified: “Around November/December last year, 12.5kg was sold at about N3,500, but in July it went up to around N5,500 and when VAT was introduced about three weeks ago, it now escalated to about N6,500 and above.”
In his remarks, Executive Secretary of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Bassey Essien, was also reported to have predicted that the cost of 12.5kg gas could hit N10,000 in December.
He said: “If by December they (government) don’t take time to address this surge, it (12.5kg) will be N10,000. We are not the one causing this, rather it is the government. We sell what we get.
“The volume we produce in Nigeria is just about 40 per cent of the total consumption; the rest is imported. And you don’t have a forex window for these people to access to import gas”, the marketer added.
