By Uche Amunike
The Federal government has enforced a 7.5% tax on imported Liquefied Petroleum Gas, LPG, generally called cooking gas, making the price escalate by over 100% within a space of 8 months.
The government implemented the VAT on LPG imports three weeks ago, mandating some dealers to pay the tax even though the commodities were imported several months ago.
According to operators, Nigeria imports an average of 70% of the commodity while the remaining is supplied basically by the Nigeria Liquefied Natural Gas Company.
It was also made known that the 12.5 kg gas which used to be sold for N3500 has jumped to N7000 in some states.
Speculations are rife that it might sell for N10,000 by December.
This hike in price of the gas has made small scale businesses and some homes in rural and semi-urban areas to resort to using firewood and charcoal for their cooking.
The National Chairman of the Liquefied Petroleum Gas Retailers Association, Michael Umudu explained that the hiking price was caused by three factors.
He said the one of the factors was that 70% of the gas consumed in Nigeria is imported and the importers havea no choice but to make do with the high cost of foreign exchange.
The second Factor is that petroleum products in the international market has experienced a hike in prices which has resulted in the rise in the cost of LPG which also make importers pay more on the imports.
The third Factor is that the Value Added Tax, VAT, on imported LPG implemented by the government was 5% of the cost of the commodity and this made the price of cooking gas escalate in the past three weeks.
According to Umudu, before the introduction of the VAT, the rise in prices was caused by foreign exchange and the cost of petroleum products in the international market, stating that 12.5 kg was sold for N3500 around November/December last year but escalated to N5,500. When the VAT was implemented 3 weeks ago, it rose to the present N6500 and more.
He said that the rising price appear to happen on a daily basis and there were no indications as to when it might drop, adding that a lot of appeal has been made to the government to try and get the NLNG to add to its domestic supply so that the product can be affordable.
The NLNG, he said, supplies 35% of the locally consumed gas and the percentage was inadequate. Also the gas sold by them is sold at international prices and not in the Nigerian currency.
Speaking on the cost of the commodity in Metric Tonnes, he made it known that the 20MT is averagely N8m as against the N6.8m to N7m which it was sold, at most.
He also noted that all other alternative sources of energy has presently suffered an upsurge in prices and usage.
In Lagos for instance, firewood is heaped like groundnut pyramids as people who use the LPG to run their businesses have resorted to using the firewood and charcoal in order to save costs and maximize their profit margins.
The executive secretary of Nigeria association of LPG Marketers, Bassey Essien, on his part, has said that by December, the cost of 12.5 kg might rise to N10,000 if the surge is not addressed.