In a significant move aimed at reducing the cost of cooking gas nationwide, the Federal Government has taken steps to exempt liquefied petroleum gas (LPG) and its equipment from customs duty and value-added tax (VAT).
The decision, communicated in a letter dated November 28, 2023, from the Ministry of Finance to key stakeholders, including the special adviser to the president on energy, the comptroller-general of the Nigeria Customs Service, and the chairman of the Federal Inland Revenue Service, is expected to result in a tangible drop in the price of cooking gas.
Signed by Wale Edun, the minister of finance and coordinating minister of the economy, the letter states that this move is in line with President Bola Tinubu’s commitment to improving Nigeria’s investment climate and promoting clean cooking practices.
“In line with His Excellency, President Bola Tinubu’s commitment to improving the investment climate in Nigeria, increasing the supply of LPG to meet local demand, reducing market prices, and promoting clean cooking practices, I hereby affirm Presidential directive dated July 29, 2022, with reference number PRES/88/MPR/99,” the letter reads.
The ministry’s directive specifies that the importation of LPG, utilizing HS Codes 2711.12.00.00, 2711.13.00.00, and 2711.19.00.00, is now exempt from Import Duty and Value-Added Tax. Consequently, the importation of LPG will incur a 0% duty rate and 0% VAT rate, effective immediately.
The Ministry of Finance has therefore instructed the Nigeria Customs Service and the Federal Inland Revenue Service to comply with the directive pending its official gazetting.
Additionally, the Nigeria Customs Service is directed to withdraw all debit notes issued to petroleum marketers who have imported LPG using specific codes from August 26, 2019, to the present date.
Various items related to LPG, such as LPG cylinders, gas leak detectors, steel pipes, and LPG dispensers, are also exempted from VAT and duty payment.
Olu Verheijen, the special adviser to the president on energy, emphasized that this decision was prompted by consultations with stakeholders, revealing that the lack of a clear fiscal directive had hindered investments in the LPG sector.
In a separate letter dated November 30, 2023, Verheijen informed the chairman of the Nigerian Alliance for Clean Cooking of these exemptions.
This initiative is a crucial step toward addressing the fiscal challenges hindering investments in the LPG sector and ensuring a more affordable and environmentally friendly solution for cooking in Nigeria.