The Nigerian Customs Service (NCS) has announced the exemption of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, from import duty and Value Added Tax (VAT). This exemption applies to LPG imported under specific Harmonized System (HS) Codes: 2711.12.00.00, 2711.13.00.00, and 2711.19.00.00. Furthermore, the NCS has committed to withdrawing all debit notes issued to petroleum marketers who imported LPG using these codes from August 26, 2019, to the present date. This action aligns with previous approvals and reinforces the government’s commitment to promoting the use of cleaner energy sources. The initiative is part of the broader Presidential Gas for Growth Initiative, championed by President Bola Tinubu, which aims to stimulate investment in the Nigerian gas sector and encourage domestic gas utilization.
This policy shift signifies a significant step towards achieving several key national objectives. Firstly, it directly addresses the rising cost of living by reducing the price of cooking gas, a staple energy source for many Nigerian households. Secondly, it strengthens Nigeria’s energy security by promoting the domestic utilization of natural gas resources, reducing reliance on imported fuels. Thirdly, it accelerates the nation’s transition towards cleaner energy sources, contributing to environmental sustainability and mitigating the impacts of climate change. The removal of import duties and VAT on LPG serves as a powerful incentive for businesses to invest in the gas sector, driving economic growth and job creation.
The NCS has further broadened the scope of these fiscal incentives to encompass machinery, equipment, and spare parts imported for gas utilization in Nigeria. Under Part 1, Section 5 of the Customs and Excise Tariff Act, these items are now subject to a zero percent import duty rate. This provision applies to all equipment related to Compressed Natural Gas (CNG) and LPG, reflecting the government’s comprehensive approach to promoting gas usage across various sectors. The zero-rating for import duty extends to a wide range of equipment, ensuring that businesses engaged in gas processing, transportation, and utilization have access to affordable and readily available technology.
Beyond the import duty exemptions, the government has also implemented VAT exemptions for a range of gas-related items and services. These include feed gas for all processed gas, CNG, imported LPG, CNG equipment components, conversion and installation services, LPG equipment components, conversion and installation services, and all equipment and infrastructure related to the expansion of CNG, LPG, and the Presidential CNG Initiative, including conversion kits. This comprehensive VAT exemption further reduces the cost of accessing and utilizing gas, making it a more attractive energy option for businesses and consumers alike.
To ensure transparency and proper implementation of these incentives, the NCS has outlined a clear procedure for importers to follow. Importers seeking to benefit from the import duty and VAT exemptions must obtain an Import Duty Exemption Certificate from the Federal Ministry of Finance. Additionally, they must secure a letter of support from the Office of the Special Adviser to the President on Energy. These requirements ensure that the incentives are utilized by legitimate businesses and projects that align with the government’s objectives of promoting gas utilization. This process also helps to monitor and evaluate the effectiveness of the policy in achieving its intended outcomes.
The NCS, under the leadership of Comptroller General of Customs, Adewale Adeniyi, has reaffirmed its commitment to effectively implementing these incentives. The service calls upon all stakeholders, including importers, distributors, and consumers, to ensure strict and prompt compliance with the stipulated procedures. This collaborative effort between government agencies and industry players is crucial for maximizing the impact of the incentives and realizing the full potential of Nigeria’s gas resources. By working together, stakeholders can contribute to a more sustainable and prosperous energy future for the nation. The NCS emphasizes that these measures are not merely about fiscal incentives but about a fundamental shift towards a cleaner, more secure, and more affordable energy landscape for Nigeria. The long-term benefits of these policies are expected to extend far beyond immediate cost reductions, contributing to economic growth, job creation, and environmental sustainability.
