• Thursday, July 18, 2024
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Rising gas prices threaten domestic market growth

LPG

Recent uncontrollable northward movement in the Liquefied Petroleum Gas (LPG) market price curve is a major threat to the domestic LPG market. Shina Luwoye, CEO of Ecogas Energy Resources Limited, stated this at a press briefing.

“Ecogas had steadily pursued LPG adoption and penetration within the localities of its gas refilling plants as well as cost-cutting measures aimed at making the product more available and affordable,” Luwoye said.

He however attributed the price hike to the introduction of 7.5 percent Value Added Tax on imported LPG, the devaluation of the naira and the scarcity of dollars.

“What we are now experiencing with gas also has elements of general price increase/inflation in Nigeria that is affecting the nation in general and other petroleum products. And because just 40 percent of demand for LPG is being supplied locally while 60 percent is sourced through importation, a lot of other external factors have come to affect the price. Chief among these is the 7.5 percent Value Added Tax,” he said.

He further stated that Ecogas had steadily pursued LPG adoption and penetration within the localities of its gas refilling plants as well as cost-cutting measures aimed at making the product more available and affordable.

“The Federal Government’s efforts to deepen adoption of LPG have been yielding results. We can boldly see this through the high demand for the product. Even my aged mother who hitherto forbids her tenants from using cooking gas now uses LPG for cooking.

“The gains we have recorded, which now make more people demand for gas, show that we have done well as a country in terms of gas. Unfortunately, the recent uncontrollable northward movement in LPG market price curve is a major threat to the domestic LPG market,” he said.

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gas prices

He also indicated that the naira devaluation and the subsequent forex shortage had become a serious issue for importers of the LPG who need dollars to effect their imports.

Earlier at a different forum, Colman Obasi, national president, Oil and Gas Service Providers Association of Nigeria (OGSPAN), said, “As a stakeholder in the sector, we were delighted when the Federal Government previously excluded operators in the LPG sector from paying 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. However, having taken these steps, we were shocked to learn that the Federal Government is currently considering imposing VAT, targeted at increasing its revenue,” he said.

“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 out 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,” Obasi noted.

“The planned introduction of VAT on LPG could reverse the gains already made in the Federal Government Gas Expansion Programme targeted at achieving rapid development of the sector,” he said.