Federal Government policies are stifling growth in natural gas sector
The current price at which Liquefied Petroleum Gas, LPG, also known as domestic cooking gas, is sold in Nigeria is the highest in the world, the President of the Nigerian Liquefied Petroleum Gas, LPG, Association, Auwalu Ilu, has said.
Mr. Ilu who said this in Lagos, on Monday, blamed government policies for the high prices of cooking gas.
“In the last three months, the price of a 12.5 kg cylinder of the gas has soared to over N3, 000 from the previous average of between N2, 000 and N2, 400 per cylinder. At over N3, 000 per 12.5kg cylinder, the price of cooking gas in Nigeria is the highest in the world,” he said.
He said some policies of the Federal Government are inconsistent with its drive to grow the country’s natural gas sector, and are limiting investments in cooking gas sub-sector.
Mr. Ilu said that investments in the domestic cooking gas sub-sector, would witness radical growth if the Federal Government stopped the Value Added Tax currently imposed on all imported raw materials used for LPG cylinders.
According to Mr. Ilu, the immediate overhaul of the tax regime in the sector would promote mass usage of the product. He said that duty-free regime on the LPG value chain would enhance the growth of the country’s cooking gas market.
He identified the initial cost of investment in cylinders, and the cheap alternative sources of fuel, such as firewood and saw dust, as major impediments limiting total acceptance of cooking gas in most Nigerian homes. He also faulted the pricing mechanism of cooking gas in the country as well as the verification policy of the Standards Organisation of Nigeria; saying, if reviewed, the sector would experience unprecedented growth.
Drawing a parallel between the crisis in gas supply and its high cost to government policies, Mr. Ilu expressed fears that the country’s gas industry would stagnate under the existing regime, adding that the epileptic state of Nigeria’s four refineries has marred efforts at producing the product domestically.
“There is also the absence of incentives to encourage investment in key infrastructure to boost local production and sales of the product to consumers,” he said.
“The absence of a waiver on import duty and VAT on locally sourced LPG is crippling the business.
“The Federal Government has refused to be very categorical on whether the LPG is “non-VAT-able”, whether the gas is imported, or is sourced locally,” he added.