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Thursday, August 11, 2022
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Prices of cooking gas up 100% to N7,000 per 12.5kg as govt imposes VAT on LPG imports

Many Nigerians may resort to the use of alternative means for cooking as prices of Liquefied Petroleum Gas (LPG) hits the roof as the government implemented a 7.5 percent Value Added Tax (VAT policy on imported cooking gas.

Survey of cooking gas prices shoed that the commodity has jumped by more than 100 percent since December 2020 across the nation.

Despite the presence of the Nigeria LNG, which largely produce natural gas and Liquefied gas, Nigeria import around 70 percent of LPG for domestic use, with the balance of about 30 percent sourced locally by dealers.

Industry sources said the government began the implementation of the 7.5 percent VAT on LPG imports about three weeks ago while some dealers were also mandated to pay the tax for commodities imported several months ago.

The price of 12.5 kg cooking gas which sold at around N3,500 eight months ago is now going for N6,500 in Lagos and Ogun States last week.

Already, small retailiers are selling 12.5 kg cylinder refill at N7,000 at some shops in Lagos and part of Ogun States while some dealers are projecting that the refill for 12.5 kg would cost N10,000 going by the rate the price is going up.

Operators stated the development had made small businesses and homes in rural and semi-urban areas to revert to firewood and charcoal, as the purchase of cooking gas had plunged in recent months.

The National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, Michael Umudu, said there were three factors that caused the surge in price.

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“There are three major factors to the hike in prices. Firstly, about 70 percent 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 percent of the cost of the commodity and this exacerbated the price hike of cooking gas in the past three weeks,” Punch Newspaper quoted Umudu as saying in a report on Monday.

Umudu stated that 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.

“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,” he stated.

“The price hike seems to be happening on a daily basis and nobody can tell when it will stop. There has been a lot of appeal to the government to find a way of persuading NLNG to increase its domestic supply so that the product can be affordable.

“NLNG supplies about 35 per cent of the gas we consume locally and that percentage is not adequate. And the gas sold by NLNG is even sold at international price and is priced in dollar not naira,” Umudu said.

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