Nigeria’s Gas Utilisation Increases VAT

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Value added tax data published recently by the National Bureau of Statistics show gas contribution to that basket has been steady and growing in the last five years.
This means that there have been productive activities which are creating value along the gas chain and attracting VAT, which is a function of value creation in any sector of the economy.
An increasing VAT means the sector is expanding and creating taxable value.
Gas contribution’s steady growth points to growing adoption and utilisation amid a raft of challenges regarding gas pricing and infrastructure.
In 2014, gas contributed N3.32 billion to the VAT basket out of a total of N129 billion and in 2015 gas raked in N3.30 billion out of N759 billion.
Gas utilisation covers a range of projects involving marketing and distribution of natural gas for commercial purposes and includes power plant, liquefied natural gas, gas to liquid plant, fertilizer plant, gas transmission and distribution pipelines.
In 2016 gas realised N4.51 billion out of N777 billion and in 2017 it gathered N5.47 billion out of N972 billion.
In 2018, gas garnered N5.74 billion out of N1.10 trillion that comprised the VAT basket.
Nigeria’s Federal Government has in recent times sought to change the narrative of gas adoption and utilisation in the country. One of the significantly big plans before the FG is the Gas Master Plan (GMP) of 2008.
This was aimed at leapfrogging the level of gas utilisation in Nigeria and to provide stimulus for development and production of natural gas in Nigeria.
According to Nigerian Gas Flare Commercialisation Programme (NGFCP), Nigeria loses approximately $1 billion of revenue through gas flaring due to its inability to capture and sell flared gas in the country. But Nigeria will need $3.5 billion worth of inward investments into gas capture technologies to achieve its flare gas commercialisation targets by 2020.
With many gas utilisations projects at various stages of completion in the country, the sad commentary is still that existing gas infrastructure is insufficient to meet gas demand from the power sector, commercial customers, industrial and exports needs.
There is still need for investments in new pipelines and other gas gathering, processing and storage infrastructures.