LPG association calls for removal of tariff on imported equipment, tax holiday

The Nigerian Liquefied Petroleum Gas Association (NLPGA) has called for the removal of duties and levies on Liquefied Natural Gas (LPG) equipment imported as well as the granting of tax holidays for new businesses in the LPG value chain.

Nigerian Liquefied Petroleum Gas Association, NLPGA President, Dayo Adesina who stated this during a courtesy visit to The Guardian Newspapers in Lagos on Tuesday, lamented that the tariffs on imported equipment like accessories, valves, regulators, cylinders are extremely high such that by the time they come out of the ports it is almost about 40 per cent.

He called for the development of the LPG sector through provision of incentives to promote clean environment, improved health, employment opportunities, human capital development, and affordable energy for Nigerians.

Reduction in tariff, according to Adesina, would make LPG cheaper and affordable to Nigerians thereby increasing their purchasing power on other activities.

Adesina, who was at the Rutam House with some executive members of the association, stated: “Local manufacturing needs to come into play, unfortunately a lot of the raw materials for that will be imported as well. So, if you don’t take a holistic approach and make sure that anything to do with LPG gets the barest minimum in terms of tariff and duties then it will have a negative impact on the final outcome.

For example, we cylinder manufacturing plants that are yet to start production because raw materials became extremely expensive and the cost of production became so high they couldn’t compete with cheap import.

“We need to be able to stimulate local production by making sure that there is environment that is conducive and that is why government support is critical”.

Adesina said that more revenue can be earned by Government if kerosene is concentrated on the aviation industry as ATK. He stressed on the need for the Federal Government to make the business environment conducive for investors. “We don’t need government to give us money; we need a conducive atmosphere. How is it that Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Port Authority (NPA) are charging dollars for services rendered in Nigeria? All those are some components that push the price of LPG up. This resource needs to get to the people and infrastructure is one way it can get to them.

“Nobody is going to put his money if he is not going to recoup it and which is why for many years we had been screaming that supporting kerosene which kills people was not the right way to go. The right way to have gone was to support LPG”, he added.

He said the collapse of the refineries, which were the main sources of cooking gas in Nigeria, led to the disappearance of the product from the Nigerian market.

This, he said, led to the importation of the product from Benin Republic until former President Olusegun Obasanjo directed the Nigeria LNG Limited to set aside 150,000 metric tonnes of LPG for the domestic market.

The measure, he noted, was to bridge the supply gap created by the collapse of the refineries. He said that there is enough supply from NLNG to meet the demand of domestic gas users.

Adesina stated: “What has been the problem are infrastructural challenge and the fact that jetties or receiving terminals are only three in Lagos. In two of the terminals that are multiproduct terminals where you have ATK, PMS and others, priority is given to those products rather than LPG.

“Compared to the one terminal that has a dedicated jetty, regardless of when the vessel gets there it will be able to discharge but it is not so in the multiproduct terminal. Some time you have delays of 15, 20 and 45 days although that has been resolved to some extent because of a lot of engagements with NLNG and PPMC.

“Those two multiproduct terminals are beginning to get a bit more access for discharge. So, it has mostly been infrastructural problem and that is why a lot of private sector players are now looking at building more terminals in Port Harcourt and Calabar.

“There are quite a lot of terminals on the infrastructure side which would come on stream and that would help.
Truly, the product is available in-country but the infrastructure challenge has made it difficult for regular discharges to take place and that has created room for people to import when there is no need for that and NLNG has said that even if we need to go to a million tons they are ready to supply as long as the market can absorb it.

Government support in the LPG sector, he hinted would encourage new businesses as massive employment opportunities.He added that gas gathering, processing and utilization schemes would be created through partnerships.