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Remove tariff on gas vessels — Expert says

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By Usman Oladimeji

Pursuit of a gas-centric economy is jeopardized by the high tariff.

CEO of Gas Initiative Nigeria Mr. Taiwo Odediran has called on FG to remove the duty on imported compressed gas containers. At a press conference on Thursday in Ilorin, Kwara state, Odediran claimed that the tariff (67.5 percent) as stated under the Customs and Excise Tariff, is inconsistent with the gas economy goal of the administration of President Bola Tinubu. To him, the country’s efforts to develop its gas economy have been largely stunted by the recently updated Import Adjustment Tax of 40% on containers of Compressed/Liquefied Gas, bringing the total tariff charged for this item to 67.5 percent.

According to him, it would be an understatement to assert that the tariff is bogus and exorbitant, thereby necessitating expeditious reassessment. The existence of a gas utility is contingent upon the presence of steel pressure vessels for the containment and storage of said gas. Gas containers or tanks are an indispensable component of any gas utility infrastructure. He opined that the incumbent administration’s deliberate pursuit of a gas-centric economy is being jeopardized by the impractical tariff imposed on the Storage Tanks, a pivotal element of Gas Utility as previously mentioned.

Generating revenue is what birthed imposition of tariffs.

Currently, the Customs and Excise Tariffs (CET) rate for gas containers and storage is 67.5 percent. Included in these are a 20 percent ID fee, a 7.5 percent VAT, and a 49% IAT. Odediran remarked that stakeholders in the gas industry are surprised that the gas storage tank, a key component of President Tinubu’s gas economy aims, might be subject to the highest taxes in the entire system of customs and excise levies in the country. He pointed out that countries’ economies are no longer being propell positively by bogus levies on such a product.

In his view, tariffs have three fundamental purposes which are to function as a means of generating revenue, safeguard domestic industries and to rectify trade imbalances which is the punitive role. The revenue function can be attributed to the inherent correlation between tariffs and the provision of financial resources to governments. Historically, generating revenue is what birthed imposition of tariffs. However, it’s significance has been diminished by our economic development and the establishment of a more sophisticated Systematic Domestic Tax framework.

No reason for big investment on gas containment production.

He mentioned Japan as an example of an industrialized country that, in just a few years, generated around one trillion Yen in tariff revenue, which is arguably regarded to be less than two percent of its Total Tax Revenues. Odediran remarked that, in a Gas-Based Economy, Nigeria would benefit more from the import duties on Gas Utility Facilities and equipment like storage and containers if the bogus charges were eliminated or decreased. The tariff, he continued, is a policy instrument for safeguarding home industries by adjusting the competitive environment for goods in a way that downsides competitive imports.

Nigeria is not yet successful in steel production as there is no mill in the country that produces steel sheets, which is the only material capable of making pressure vessels for gas containment or storage. We need a thriving gas industry, he said, but until then, there is little reason to make substantial domestic investments in pressure vessel production for gas containment or storage at the current absurd tariff of 67.5 percent. It’s also unexpected that compressed or liquefied gas containers, which fall within the CET Article of Iron and Steel Chapter, are at the highest peak of taxes at the rate of 67.5 percent.

Attaining the task is arduous with the 67.5 percent tariff.

Moreover, he asserted that this occurrence must have been either inadvertently executed or orchestrated by economic saboteurs to impede the sustained influx of investments in gas infrastructure. It is readily discernible that if the presence of gas is available on the thoroughfares of Nigeria, the requisite vessels for its containment or storage must be conveniently obtainable. Nevertheless, attaining such a goal is an arduous task to achieve given the imposition of a tariff amounting to 67.5 percent on the importation of gas storage tanks, he said.

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