December 3, 2022

The current energy crisis in the country could worsen in the coming weeks, as the Federal Government returned taxes on imported Liquefied Petroleum Gas (LPG) amid soaring pump price, as well as the projected removal of subsidy on Premium Motor Spirit (PMS) early next year.

 

Although the Minister of State for Petroleum Resources, Timipre Sylva had said that the country’s natural gas deposit is set to hit 600 trillion standard cubic feet (SCF), from the existing 206 trillion SCF, the absence of refineries and gas processing plants means that the country is importing over 90 per cent of its energy needs.

 

Given the rising prices of crude oil and natural gas at the international market and other economic indexes, the price of cooking gas has within the year increased by over 100 per cent alongside the price of petrol and diesel.

Even though the Federal Government had exempted cooking gas from import duties, The Guardian can confirm that taxes being returned to the product will see the four major importers of the product into the country pay about N27b to Nigerian Customs Service (NCS) in the coming weeks.

 

The Guardian reliably gathered that the affected companies have already commenced factoring the new tax into the market cost of the product, a clear indication that consumers would have to up their cooking gas budget as demand peaks ahead of the Yuletide.

 

Stakeholders, who spoke to The Guardian, yesterday, said the development was not only an indication of the insensitive disposition of the current administration towards the plight of the masses, as well as one that would increase the rate of deforestation, poverty, worsen biodiversity and cripple the global COVID-19 recovery plan.

 

With the country’s yearly deforestation rate already standing at about four per cent, as about 350 billion hectares of land is being lost yearly, the high price of cooking gas has so far returned many Nigerians to the era of firewood and charcoal usage. All these at a time that the President Muhammadu Buhari-led administration pledged to commit to the Paris climate change agreement, as well as the net-zero plan.

 

Despite the National Gas Expansion Programme (NGEP), where the Central Bank of Nigeria (CBN) is sinking in about N250b intervention fund, Nigeria still imports about 60 per cent of LPG for the domestic market, while a paltry 40 per cent is sourced locally.

 

With the petrol price set to rise N340 per litre next year, and diesel already selling for about N350, the international gas price soared from $380 per metric ton to about $750 per metric ton.

 

The Guardian investigation revealed that the four major firms that import gas to supplement domestic supply, are currently struggling for survival under the new tax regime.

 

They were issued a debit note by the NCS for products imported since 2019, without prior tax notice, a move, which has weighed on their financial base and threatened their existence.

 

On the debit note, sources told The Guardian ordered Matrix to pay about N11b, Providence N2.9b, NIPCO N4.9b, and Algasco about N9b. These amounts were described as the cost of the tax on gas imported into the country between 2020 and 2021.

 

Sources in the affected companies said the import tax was strange to their businesses as there was no prior notice to that effect.

 

A top manager at one of the firms said that the sudden imposition of import tax on the companies without prior notice has placed an immense burden on the companies’ balance sheets while opposing the decade of gas agenda of the Federal Government.

The source explained: “There was no import tax on LPG before now to encourage Nigerians to use gas. Just about three months ago, the Nigeria Customs Service (NCS) raised a memo to some gas marketers such as Matrix, NIPCO, Prudence and Algasco with a debit note indicating that tax on products imported from 2020 running into billions of naira should be remitted,”

 

The source continued: “It is rather unfortunate that over the years that we have been importing gas, the NCS has been clearing the cargo without any notification of payment. How can it come now and ask us to pay for accumulated duty?”

 

The marketer lamented that the money, which was not factored into the product’s pricing over the period has now become a financial burden on affected companies and may lead to their sudden collapse.

 

The Guardian however gathered that the marketing firms, which have issued a joint memo to the Presidency to review the tax policy are yet to get any response. They have also met with the NCS, and the minister of finance on the matter, but no positive response yet.

 

However, they have commenced importation of the product, while now factoring in the Value Added Tax (VAT) and import duty in the cost. This has also contributed to the high cost of products in the local market.

 

The Executive Secretary, Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Bassey Essien, told The Guardian in an exclusive interview that the new prices are yet to be reflected in retail sales because the dealers were still selling old stocks.

 

He is, however, optimistic that the price would crash further in the international market while urging the Federal Government to urgently do away with the new tax to further crash the domestic price and make cooking gas affordable for Nigerians.

 

He said: “People are crying; the marketers are groaning; the consumers are crying, but the government, which brought the issue of VAT and customs duties is keeping mute. It should come and tell us categorically its decision on the whole matter.

 

“Let them make a categorical statement. Even though some marketers have started importing gas, we don’t know the arrangement because nobody has come out to tell us what the government has done.

Continue reading from the Guardian Page 

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