The federal government has waived the payment of customs duty and value-added tax (VAT) on the importation of liquefied petroleum gas (LPG) and its equipment.
The move is expected to reduce the cost of cooking gas in Nigeria.
The announcement was made through a letter addressed to the President’s Special Adviser on Energy, the Comptroller-General of the Nigeria Customs Service (NCS), and the Chairman of the Federal Inland Revenue Service (FIRS). The said letter was dated November 28, 2023.
Wale Edun, the minister of finance and coordinating minister of the economy, signed the letter.
The exemption, according to the ministry, aligns with President Bola Tinubu’s commitment to improve Nigeria’s investment climate and promote clean cooking practices.
The letter reads:
“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”.
“Accordingly, the importation of LPG utilizing HS Codes 2711.12.00.00, 2711.13.00.00 and 2711.19.00.00 is exempt from Import Duty and Value-Added Tax. Consequently, the Importation of LPG shall incur a 0% duty rate and 0% VAT rate, effective immediately.”
The ministry directed the NCS and FIRS to follow the directive until it was officially gazetted.
In addition, the ministry directed the NCS to comply with a presidential directive issued on July 29, 2022, and to withdraw all debit notes issued to petroleum marketers who imported LPG “using codes 2711.1.2.00.00 and 2711.13.00.00 from August 26, 2019, to the present date.”
LPG cylinders, LPG cascades, gas leak detectors, steel pipes, steel valves and fittings, LPG dispensers, gas generators and LPG trucks are also exempt from VAT and duty payment.
According to Olu Verheijen, the president’s special adviser on energy, the decision was prompted after consultations with stakeholders.
The consultation revealed that the lack of a clear fiscal directive has hampered investments in the LPG sector.
In a separate letter dated November 30, 2023, Verheijen informed the Nigerian Alliance for Clean Cooking chairman of the exemptions.
According to her, a lack of investment has resulted in higher cooking gas prices and increased use of “unhealthy fuels such as paraffin.”
In 2019, the Federal Government of Nigeria abolished VAT on LPG.
However, the FG began implementing the 7.5 per cent tax on imported LPG in 2021, exempting locally manufactured petrol.
