Recently the Oil and Gas Service Providers Association of Nigeria, OGSPAN, has implored the Federal Government not to impose the Value Added Tax, VAT, on Liquefied Petroleum Gas, LPG. According to this body, the imposition of VAT on LPG will negatively impact LPG demands, utilisation, investment, and growth of the sector in Nigeria.
The president of OGSPAN, Colman Obasi, stated that: “As a stakeholder in the sector, we were delighted when the Federal Government previously excluded operators in the LPG sector from paying VAT……. However, having taken these steps, we were shocked to learn that the Federal Government is currently considering imposing VAT, targeted at increasing its revenue.”
Should this imposition of VAT happen, it would be in opposition to the presidential directive issued on July 11, 2005, to remove VAT on LPG. But the approved memo erroneously had the word ‘import’ left on it, because at the time imports were the only source of gas. This implied that industry operators fought for 14 years to reverse this situation in 2019. The president of OGSPAN also highlighted that the recent drive for Autogas by the Federal Government using LPG or Propane can only be successful if the cost of those fuels is reasonable.
The LPG sector had suffered from many problems, including policy inconsistency, inadequate funding, and low domestic utilisation, which needs to be fully addressed by the current government administration.
Hence, there is a need for the government to reconsider the taxation route that it wants to embark on within the LPG sector.