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FG waives VAT, custom duty on LPG import

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By Abraham Adekunle

Policy aims at crashing the price of cooking gas nationwide.

Nigeria economic landscape is set to undergo a significant transformation with the Federal Government’s recent announcement. In a pioneering effort to promote economic relief and enhance access to cleaner energy, a groundbreaking decision has been made. Detailed in a letter from the Ministry of Finance, this game-changing directive entails the removal of both Value Added Tax (VAT) and customs duty on imported Liquefied Petroleum Gas (LPG). This pivotal move aims to revolutionize the affordability of cooking gas in the country.

The intended strategic move is predicted to have wide-ranging consequences, signaling a significant decrease in the total expenditure on household and business cooking gas throughout the country. This choice showcases a unified action taken by the government to enhance the availability and affordability of Liquefied Natural Gas (LPG), thus beneficially affecting the everyday lives of the population. The government’s motivation for its decision, as highlighted in a thought-provoking report released to the media, stems from its dedication not solely to boost economic growth, but also to cater to the rising need for environmentally friendly and sustainable cooking methods.

Customs has also been directed to comply with the policy.

On November 28, 2023, the Minister of Finance, Wale Edun, wrote a letter on behalf of the Ministry of Finance. The letter expressed the government’s firm commitment to enhancing Nigeria Investment environment. It specifically cited a presidential directive from July 29, 2023, which emphasized President Bola Tinubu’s dedication to increasing the availability of LPG, lowering market prices, and encouraging the adoption of clean cooking methods. The government’s objective is to trigger a chain reaction resulting in a significant reduction in the nationwide price of LPG by exempting customs duty and VAT on the importation of LPG and related accessories.

Also, Nigeria Customs has been given a clear directive to comply with the presidential instruction of July 29, 2023, emphasizing the extensive range of this endeavor. The explicit aspect of this directive involves the removal of all debit notes that have been issued to oil marketers who imported LPG, utilizing particular codes from August 26, 2019, till now. In addition to importing LPG, the letter also grants exemptions to various connected products such as LPG cylinders, cascades, gas leak detectors, Steel pipes, valves and fittings, dispensers, gas generators, and trucks.

Cooking gas price hits the highest a few months ago.

This comprehensive strategy seeks to foster an environment that supports the expansion of the LPG sector, guaranteeing a wholesome effect on both the supply chain and final consumers. The Nigerian government’s move to waive VAT and customs duty on LPG imports is a crucial step in making clean energy more accessible and affordable. This decision not only supports the country’s objectives of Economic Growth and sustainable practices, but also aims to enhance the quality of life for Nigerians.

A few months ago, Retail cost for consumers for the purchase of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, reached unprecedented levels. In October 2023, over a span of two weeks, the price of a 12.5kg cylinder of cooking gas has surged by 26 percent, escalating from ₦11,850 to ₦15,000. This surge is attributed to soaring global crude oil and gas prices, coupled with Nigeria’s forex crises. Consequently, the cost per kilogram of gas has risen from N950 to ₦1,200. This recent upswing is poised to place additional financial strain on cash-constrained consumers, diminishing their purchasing power and exacerbating a prevailing Cost Of Living Crisis in Africa’s most populous nation. Moreover, it is expected to contribute to an acceleration in October’s Inflation figures when they are officially released.

Households are making hard choices this period.

Real wages in Nigeria, which represent employee pay adjusted for inflation, have experienced a staggering decline of 200 percent. This has placed immense daily pressures on Nigerians, compelling them to confront difficult decisions amid the continuous rise in prices across all products. For households with lower incomes and minimal financial reserves, the challenges become even more pronounced, forcing individuals to make tough choices about what to prioritize in their spending, as suggested by experts. A recent report from the National Bureau of Statistics reveals that a significant 63 percent of Nigerians, equivalent to 133 million people, are categorized as multidimensionally poor. This designation implies that two out of every three individuals face Poverty and endure more than one-quarter of deprivation in areas such as health, standard of living, and employment.


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