High price of cooking gas persists despite tax cut

Maureen Aguta

The Nigerian Federal Government’s policy to make Liquefied Petroleum Gas (LPG), or cooking gas, more affordable has yet to yield the desired effect on the economy, according to Dr. Ayo Anthony, an economist. Despite the removal of customs duty and Value-Added Tax (VAT) on the importation of LPG and its associated equipment, prices continue to soar.

The policy, announced in a letter dated November 28, 2023, and signed by Minister of Finance Wale Edun, has not significantly impacted the cost of cooking gas. Dr. Anthony attributes this delay to ‘inside and outside lags’, which refer to the time it takes for a policy to be decided upon and implemented. Another factor keeping prices high is the existence of old gas stock. Marketers continue to sell their old stock at prices that reflect the importation cost prior to the new tax policy.

The price hikes are considerable. A 5kg cooking gas cylinder is currently selling for N4, 750 to N4, 900, and a 12.5kg cylinder for N11, 875 to N12, 300 in the Federal Capital Territory. Data from the National Bureau of Statistics shows an upward trend in gas prices. The average price of 5kg of cooking gas has risen from N4, 562.51 in October 2023 to N4, 828.18 in November 2023, while the cost to refill a 12.5kg cylinder has increased by 5.78 per cent month-on-month.

Looking Forward

As the Nigerian government grapples with economic challenges, the quest for affordable cooking gas becomes increasingly urgent. While policy changes can be slow to take effect, the hope is that the removal of customs duty and VAT on LPG imports will eventually lead to lower prices for consumers. In the meantime, Nigerians are left to contend with the rising cost of a basic household necessity.