The Federal Government has implemented a 7.5 percent tax on imported Liquefied Petroleum Gas, popularly called cooking gas, as the cost of the commodity leap by over 100 percent within a period of eight months.
It was gathered on Sunday that the government implemented the VAT on LPG imports about three weeks ago and some dealers were also mandated to pay the tax for commodities imported several months ago.
Operators told our correspondent that Nigeria imports about 70 percent of the commodity, while the rest was mainly supplied by the Nigeria Liquefied Natural Gas company.
It was also gathered that the cost of a 12.5kg of cooking gas that sold for about N3,500 in December 2020 had jumped to as high as N6,800 in parts of Abuja.
A resident along the Lagos-Ibadan road said she bought the commodity on Sunday at N7,200 in Lagos, as dealers projected that the cost might hit N10,000 in December this year.
Operators stated the development had made small businesses and homes in rural and semi-urban areas revert to firewood and charcoal, as the purchase of cooking gas had plunged in recent months.
The National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, Michael Umudu, said there were three factors that caused the surge in price.
He said, “There are three major factors to the hike in prices. Firstly, about 70 percent of the gas we consume in Nigeria is imported and importers have to contend with the high cost of foreign exchange.
“Secondly, there is a rise in the price of petroleum products in the international market and because of that, the cost of LPG has equally gone up. So importers now pay more on imports.
“And thirdly, the government added VAT on imported LPG about three weeks ago. It (VAT) was 7.5 percent of the cost of the commodity and this exacerbated the price hike of cooking gas in the past three weeks.”
Umudu stated that before the introduction of VAT, foreign exchange and the cost of petroleum products in the international market had been the factors causing the rise in price.
“Around November/December last year, 12.5kg was sold at about N3,500, but in July it went up to around N5,500 and when VAT was introduced about three weeks ago, it now escalated to about N6,500 and above,” he stated.
Umudu added, “The price hike seems to be happening on a daily basis and nobody can tell when it will stop. There has been a lot of appeal to the government to find a way of persuading NLNG to increase its domestic supply so that the product can be affordable.
“NLNG supplies about 35 percent of the gas we consume locally and that percentage is not adequate. And the gas sold by NLNG is even sold at an international price and is priced in dollar, not naira.”
On the cost of the commodity in metric tonnes, Umudu, replied, “20MT is now in the average of about N8m. And before VAT was introduced, the price of 20MT was around N6.8m to N7m, which was the highest price then.”
He noted that consequent to that, there has been an upsurge in the use of firewood and other alternative energy sources nowadays.
“If you come to Lagos, you will see heaps of firewood like groundnut pyramids. Many people who use LPG to run their small businesses cannot cope again because of the price. They are in crisis right now; some of them are now using firewood, others, charcoal,” he stated.
Umudu added, “Many people in the rural and semi-urban areas are dropping their cylinders. Those who find it difficult to get alternatives are actually going through a very hard time.”
Also speaking on the issue, the Executive Secretary, Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, said the cost of 12.5kg gas could hit N10,000 in December.
He said, “If by December they (government) don’t take time to address this surge, it (12.5kg) will be N10,000. We are not the one causing this, rather it is the government. We sell what we get.”
On what could be done, he replied, “The volume we produce in Nigeria is just about 40 percent of the total consumption; the rest is imported. And you don’t have a forex window for these people to access to import gas.
“And secondly, you suddenly woke up and said you want to start imposing VAT on imported gas, which was removed several years back. And now, you didn’t even start it fresh, rather you said it is going to be in retrospect, starting from several months back.”
He added, “And you are imposing billions in taxes on gas imports, for instance, you ask one company to pay about N4bn as tax. Now if they pay that money, some other person needs to shoulder this cost.”
On what the government was doing about the development, the spokesperson of the Nigerian National Petroleum Corporation, Garba-Deen Muhammad, said the Minister of State for Petroleum Resources, Chief Timipre Sylva, had said the commodity was deregulated.
Muhammed, who served as the media aide to Sylva before switching to become NNPC spokesperson recently, said, “The minister answered this question during his last press briefing two weeks ago.”
At the briefing, Sylva had said, “We are not in a position to determine gas pricing because gas is not a regulated product. But, of course, we are also very concerned that prices are rising and so I am actually doing something about it in the interest of the ordinary Nigerian.
“I am calling some of the suppliers to discuss the reason for this hike.”
He added that the intervention was outside the government’s role.
Nigerian Power Consumers Hit by Massive Overbilling, N105bn Raked by Discos
Nigerian power consumers are reeling from the impact of massive overbilling, with power distribution companies (Discos) collectively raking in N105 billion in nine months.
An analysis of the latest monthly data from January to September 2023 revealed that approximately 7.1 million unmetered electricity consumers across the nation fell victim to inflated bills.
The Nigerian Electricity Regulatory Commission (NERC), the federal agency overseeing the power sector, disclosed that the overbilling stemmed from the failure of Discos to adhere to the prescribed monthly energy caps for unmetered customers.
The overbilling issue has raised serious concerns about the financial burden on consumers and the credibility of the power distribution system.
A breakdown of the figures showed that various Discos were involved in overbilling activities, with significant discrepancies noted in the amounts charged against the estimated energy consumption.
For instance, Abuja Disco overbilled approximately 1.8 million customers by N17.9 billion, while Ikeja Disco charged 934,438 customers an excess of N20.9 billion during the review period.
The overbilling trend has prompted a swift response from NERC, which has vowed to take punitive measures against non-compliant Discos.
As part of its regulatory intervention, NERC announced plans to deduct N10.5 billion from the annual allowed revenues of the 11 Discos during the next tariff review.
Consumers, already grappling with the economic challenges, have expressed outrage over the overbilling saga.
Many have voiced concerns about the impact of excessive bills on their household budgets, calling for urgent measures to address the issue and restore transparency and fairness to electricity billing practices.
Nigeria’s Energy Sector Set for Growth as Akpo West Field Adds 14,000 Barrels per Day
Nigeria’s energy landscape is poised for significant expansion with the imminent commencement of production at the Akpo West field, a development expected to bolster the nation’s condensate output by 14,000 barrels per day (bpd).
The Akpo West field, owned by TotalEnergies and its partners, represents a pivotal advancement in Nigeria’s energy sector, promising to enhance the country’s position in the global oil market.
TotalEnergies, in collaboration with its partners, has unveiled plans for the Akpo West field, located on Petroleum Mining Lease (PML) 2, situated 135 kilometers off the Nigerian coast.
The field is strategically positioned to leverage existing infrastructure, minimizing costs and reducing greenhouse gas emissions.
Initial estimates indicate that the project’s carbon intensity will be below 5 kg CO2e/barrel of oil equivalent, contributing to TotalEnergies’ efforts to mitigate environmental impact.
The Akpo West development is anticipated to commence by mid-2024, marking a significant milestone in Nigeria’s energy sector.
With the addition of 14,000 bpd of condensate production, Nigeria’s total condensate output is poised to witness a notable surge.
Condensate, a highly sought-after light crude oil, commands premium prices in the global market, enhancing Nigeria’s revenue potential and economic resilience.
Furthermore, the Akpo West project underscores TotalEnergies’ commitment to sustainable energy development and innovation.
By harnessing existing infrastructure and optimizing operational efficiency, the project aims to maximize production while minimizing environmental footprint.
The launch of the Akpo West field represents a transformative moment for Nigeria’s energy sector, promising growth, innovation, and enhanced global competitiveness in the realm of oil and gas production.
Dangote Petroleum Refinery to Fuel 150,000 IPMAN Outlets Nationwide Following Successful Meeting
The Dangote Petroleum Refinery is poised to supply fuel to approximately 150,000 retail outlets affiliated with the Independent Petroleum Marketers Association of Nigeria (IPMAN).
The decision follows a successful meeting between the refinery’s management and top executives from IPMAN that agreed to bolster the nation’s energy supply chain.
Key industry players, including major oil marketers such as 11 Plc, Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc, and NNPC Retail, have already enrolled for product distribution from the state-of-the-art Dangote facility, which commenced the production of diesel and aviation fuel on January 12, 2024.
While regulatory assessments are underway before the final nod for fuel dispensing, IPMAN’s president expressed optimism about the positive impact this collaboration would have on the country.
“The meeting went well, so right now we are just expecting their reply in terms of the products that they are going to give us. They have agreed to dispense products to IPMAN members,” commented IPMAN’s president, reassuring that the Dangote Refinery, one of the largest in the world, is well-equipped to meet the nation’s consumption needs.
With the refinery’s promise to address fuel scarcity and bring products to market, IPMAN anticipates a transformative impact on Nigeria’s fuel distribution landscape, providing a potential solution to prevailing challenges in the sector.
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