The Oil and Gas Service Providers Association of Nigeria (OGSPAN) has urged the federal government not to implement its plan to impose Value Added Tax (VAT) on Liquefied Petroleum Gas (LPG), commonly known as cooking gas.
OGSPAN said the planned imposition of VAT on LPG would discourage demand and utilisation of the energy source an d stifle investments and growth of the sub-sector.
The National President of OGSPAN, Mr. Colman Obasi, who advanced the position of the association in a statement issued on Lagos at the weekend, warned that the return of VAT on LPG would negate the Decade of Gas policy of the federal government.
Obasi noted that the stakeholders in the sector were delighted when the federal government previously excluded operators in the LPG sector from paying the VAT but that they were shocked to hear of the plan to impose the VAT on the product again.
“We were even more delighted when it (federal government) declared January 1, 2021, to December 31, 2030, as ‘The Decade of Gas Development for Nigeria’ with emphasis on LPG.
“However, having taken these steps, we were shocked to learn that the Federal Government is currently considering imposing VAT, targeted at increasing its revenue,” he said.
He, also wondered how the gas industry could grow the Autogas initiative when VAT was applied to increase gas cost even while subsidy remains on petrol.
He stated that the LPG sector had suffered for too long from many problems, including policy inconsistency, inadequate funding, and low domestic utilisation, which he noted, needs to be fully addressed by the current administration.
The OGSPAN boss also warned that the planned introduction of VAT on LPG could culminate into the reversal of gains already made in the federal government’s Gas Expansion Programme (NGEP) which is targeted at achieving rapid development of the sector.
He stressed that Propane spec LPG, the industry-approved standard for Autogas in Nigeria was cheaper that petrol and portends huge savings for families and businesses.
He maintained that the policy would also save huge foreign exchange on fuel importation and expand Nigeria’s domestic energy mix with improved accessibility for LPG as a cleaner and cheaper energy source with multiple applicable uses.