Nigeria LPG Association Proposes New Options to Achieve Stability

In a bid to find solutions to the continues hike in price of cooking gas in the country, President, Nigeria LPG Association, NLPGA, Nuhu Yakubu, has attributed the shortage and high prices to issues such as the recent introduction of Value Added Tax, VAT, the difficulty associated with getting access to foreign exchange and extortion at various locations in the value chain.

Yakubu said, “We have been discussing with the government to grant fiscal incentives to local producers to enable them to fund infrastructure development to improve local production. Incentives include low interest bearing intervention funds, reversal on VAT on imported LPG, etc.

“Since over 50 to 60 per cent of domestic consumption is sourced from imports, we have equally argued for reversal on the recent policy of VAT on imported LPG.

“Equally due to the fact that domestic consumption is heavily reliant on imports, we have argued for Federal Government to grant improved access to forex for LPG importers.

“We are also discussing the possibility of allowing more export cargo to be channeled to domestic consumption, bearing in mind, however, the export contract obligations of respective export producers.

“We have called for zero-tolerance for extortion at depots and terminals by unions and associations.

“These extortions by way of levies have become too much and now constitute a significant percentage of retail pump price build-up.

“These are some of the areas we are currently advising the government on.”

However, data from the Petroleum Products Pricing Regulatory Agency, PPPRA, indicated that more LPG has been supplied across the country this year compared to the corresponding period in 2020.

The data showed that as of August 2021, 740,675.72MT of cooking gas, indicating an increase of 9.6 per cent, was supplied in 2021 compared to 675,814.72MT supplied in the first eight months of last year.

The PPPRA data also indicated that despite having one of the world’s largest gas reserves and leading exporter of Liquefied Natural Gas, the bulk of LPG consumed in Nigeria is imported from the global market.

According to the latest data, in August 2021, 55.4 per cent of the 85,264.803MT supplied nationwide was imported from the USA, Algeria and Equatorial Guinea while 44.6 per cent was sourced locally.

In any case, the rising prices of LPG constitute a serious threat to the Federal Government’s plan to increase the usage of gas as the clean energy of choice for energy transition campaign.