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Decade of Gas: Imposing VAT On LPG’ll Scuttle Dev, OGSPAN Warns
The Oil and Gas Service Providers Association of Nigeria (OGSPAN) has urged the Federal Government not to impose the Value Added Tax (VAT) on Liquefied Petroleum Gas (LPG).
According to OGSPAN, the planned imposition of VAT on LPG would stifle, demand, utilisation, investment and growth of the sector in the country.
In an interview with newsmen, the National President of the association, Colman Obasi, said, “As a stakeholder in the sector, we were delighted when the Federal Government previously excluded operators in the LPG sector from paying the VAT.
“We were even more delighted when it declared January 1, 2021, to December 31, 2030, as ‘The Decade of Gas Development for Nigeria’, with emphasis on LPG.
“Specifically, the official launch of The Decade of Gas was declared by President Muhammadu Buhari, on March 29, 2021, also recognised 2021 as ‘Year of Gas’.
“However, having taken these steps, we were shocked to learn that the Federal Government is currently considering imposing VAT, targeted at increasing its revenue.”
According to him, “A Presidential directive was 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 meant that the Federal Inland Revenue Service (FIRS) charged VAT on locally produced LPG but there was no output VAT, so the VAT cost was absorbed as a loss by industry players.
“Industry operators fought for 14 years to reverse this situation and the Minister of Finance finally removed the VAT on ‘domestically produced gas’ under a gazette issued in 2019, thus stopping the FIRS from charging VAT on LPG under a loophole that was created in error.
“The FIRS itself, under several subsequent letters (now available in the public domain) advised companies that neither input nor output VAT was payable on LPG, in line with other petroleum products.
“Industry operators and experts had warned at the time that insertion of the phrase ‘locally produced’ in front of LPG would lead to the reverse case through this legal loophole and, yet again, another round of needless quagmire.
“Experts have repeatedly pointed observed that of all the petroleum products listed in that gazette, why was LPG singled out for the phrase ‘locally produced’?; why not gasoline and diesel, which we don’t produce and yet import over 100 times more quantity than LPG.
“The Federal Government recently launched a drive for Autogas, using LPG/propane. How can the gas industry grow Autogas when VAT is applied to increase gas cost, but a humongous tax subsidy remains on the competing gasoline/PMS? Who is going to switch when gas prices are increasing as a result of this needless tax?
“For too long, 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 administration.”
Obasi also disclosed that the planned introduction of VAT on LPG could culminate in the reversal of gains already made in the Federal Government’s gas expansion programme, targeted at achieving rapid development of the sector.
According to him, “The policy is aimed at enthroning gas as preferred energy for the domestic economy because it’s comparatively cheaper.
“While a litre of government subsidised petrol, under extant price regime, actually retails for between N165 and N200 per litre, depending on different parts of the country, the average deregulated retail price per litre of LPG delivered to Abuja/FCT falls between N100/Litre for propane specification to N195/litre for butane specification.
“The cheaper of the two, being propane spec LPG, is the industry-approved standard for Autogas in Nigeria, which portends huge savings for families and businesses.
“Autogas use with deep market penetration with a reasonable switch from PMS and AGO will save Nigeria huge foreign exchange spend on fuel importation; expand Nigeria’s domestic energy mix with improved accessibility for LPG as a cleaner and cheaper energy source with multiple applicable uses.
“This will, in great measure, help consumers, especially the low-income Nigerian families, with their fast-eroding purchasing power in an increasingly difficult economic environment.
“Apart from savings on the unit price per litre or kg of gas, there is also much savings on gas, with respect to engine servicing and overall maintenance cost, compared to petrol or diesel engine maintenance cost. And it is environmentally friendlier than petrol and diesel, in terms of greenhouse gas emissions.
“Autogas use will help trigger the much-needed demand intensive use of gas, with the multiplier benefit effect on improved in-country production and supply sources, with the attendant reduction in gas flaring, and a marked increase in foreign direct investments in LPG production plants, trading and distribution infrastructure and equipment manufacturing in Nigeria, which has been on the decline in recent years,” Obasi added.
Rivers State Head of Service, Dr (Mrs) Inyingi Brown, has called on rural communities in the State to embrace the Rural Access and Agricultural marketing project (RAAMP) with a view to improving their living conditions.
This follows the ongoing sensitization campaign by the State Project Implementation Unit (SPIU) visits to Degema, Abonnema, Afam headquarters of Degema, Akuku Toru and Oyigbo Etche and Omuma local government areas respectively.
Dr Brown who was represented by the Deputy Director, Special Duties in her office, Mrs Dein Akpanah, said RAAMP was initiated by the Federal Government and World Bank to economically empower rural dwellers.s
She said the World Bank understands the plights of rural farmers and traders in the State, and therefore came up with the programme to address them.
According to her, RAAMP will improve the conditions of farmers, traders and fishermen, and therefore, behoves on every rural communities in the State to embrace the programme.
The Head of Service also said the programme would support the youths to be gainfully employed while bridges and roads will be built to link farms and fishing settlements.
Also speaking, the State project coordinator, Mr Joshua Kpakol, said the programme has the potential of creating millionaires among farmers and fishermen in the State.
Kpakol who was represented by Engr. Sam Tombari, said RAAMP would help farmers and fishermen to preserve their produce.
According to him, the project will build cold rooms and Silos for preservation of crops and fishes while access roads will also be created to link farmers and fishermen to the market.
He, however, warned them against any act that will lead to the suspension of the projects by the World Bank.
Kpakol particularly warned against acts such as kidnapping, marching ground, gender based violence and child labour, adding that such acts if they occur may lead to the cancellation of the project by the World Bank.
During the visit to Oyigbo local government area, Mr Joshua Kpakol, said the team was there to let them know how they will benefit from the Raamp.
The coordinator who was personally at Oyigbo said the World Bank introduced the project to check food insecurity in the State.
He said already 19 states in Nigeria are already benefitting from the project and called on them to embrace the project.
Meanwhile, stakeholders in the three local government areas have commended the World Bank for including their areas in the project.
They, however, complained over the incessant attacks by pirates on their waterways.
At Degema, King Agolia of Ke kingdom said land was a major problem in the kingdom.
King Agolia represented by High Chief Alpheus Damiebi said many indigenes of the kingdom are willing to go into farming but are handicapped by lack of land.
Also at Degema, the representative of the Omu Onyam Ekeim of Usokun Degema kingdom, Osoabo Isaac, said Degema has embraced the programme but needed more information on the implementation of the programme.
Similarly, while High Chief Precious Abadi advised that the project should not be narrowed to only crop farming, a community women leader, Mrs Orikinge Eremabo Otto, called for the construction of cold rooms in all fishing settlements in the area.
At Abonnema, Mr Diamond Kio linked the problem of the area to incessant piracy along waterways.
He also expressed fears over the possibility of the project being hijacked by politicians.
Also at Abonnema, a stakeholder, Ikiriko Kelvin, called on the World Bank to design an agricultural project that will suit the riverine environment, while at Oyigbo, HRH Eze Boniface Akawo expressed satisfaction with the project.
John Bibor
The political mudslinging between the Senate leadership and Senator Natasha Akpoti-Uduaghan continued yesterday as the Senate named Senator Aniekan Bassey as the new Chairman of the Committee on Diaspora and Non-Governmental Organisations.
Senate President, Godswill Akpabio, announced the appointment during yesterday’s plenary, confirming Bassey’s replacement of Senator Natasha Akpoti-Uduaghan, who is currently on suspension.
Akpoti-Uduaghan was reassigned to the Diaspora and NGOs Committee in February after she was removed as Chair of the Senate Committee on Local Content during a minor reshuffle.
Bassey is the senator representing Akwa Ibom North-East Senatorial District.
Although no reason was given for her removal yesterday, the change is believed to be connected to her unresolved suspension.
In May, Justice Binta Nyako of the Federal High Court ordered her reinstatement and directed her to tender an apology to the Senate.
However, the Senate has insisted it has not received a certified true copy of the court judgment.
Akpoti-Uduaghan who represents Kogi Central, has yet to resume her legislative duties despite a recent court ruling that voided her suspension.
In a televised interview on Tuesday, Akpoti-Uduaghan said she was awaiting the Certified True Copy of the judgment before officially returning to plenary, citing legal advice and respect for institutional process.
Although the Federal High Court described her suspension as “excessive and unconstitutional”, a legal opinion dated July 5 and attributed to the Senate’s counsel, Paul Daudu (SAN), argued that the ruling lacked any binding directive to enforce her reinstatement.
Akpoti-Uduaghan, one of only three female senators in the current assembly, said the continued delay in allowing her return was not only a denial of her mandate but also a blow to democratic representation.
“By keeping me out of the chambers, the Senate is not just silencing Kogi Central, it’s denying Nigerian women and children representation. We are only three female senators now, down from eight,” she said.