Photograph — Origin Energy

Plans by the Petroleum Products Pricing Regulatory Agency (PPPRA) to impose an administrative fee on liquefied petroleum gas (LPG), also known as cooking gas, has been kicked against by the Nigeria LP Gas Association (NLPGA).

According to NLPGA, the proposed administrative fee, which was set to take effect from September 1, 2020, would be counter-productive towards the government’s deliberate effort to boost gas development and poses a setback for promoters and LPG investors.

Nigeria’s LPG industry is arguably the fastest-growing in Africa. Despite fluctuating foreign exchange rates and a COVID-19 battered economy, stakeholders in the sector have managed to stabilise the general affordability of the product for all.

However, a few months after the Department of Petroleum Resources (DPR) commenced levying Off-takers’ Permit, which led to loading disruptions at a number of depots, the PPPRA announced an administrative fee of almost ₦50,000 per 20-metric tonne truck.

In response to the PPPRA announcement, NLPGA released a memo in which it insisted that the agency has no administrative role whatsoever in the activities of Nigeria’s LPG sector as currently structured, as it is a fully deregulated product.

The current count of levies on a 20MT LPG truck has exceeded ₦120,000 (NUPENG – ₦23,000, DPR’s Off-Take Permit – ₦50,000, PPPRA’s ADMIN Fee – ₦49,200 = ₦122,200 just to list a few), hence doubling the product cost,” the memo read.

NLPGA further argued that several measures have been made by the government to further catalyse sectoral growth such as the waiver on VAT on LPG and its equipment; waiver on import duty on the importation of LPG equipment; and the various strategic consultations to deepen gas utilisation by strengthening autogas, gas-to-power applications and initiatives.

“Unfortunately, we are saddened to note that the same government that wants to encourage deepening of LPG for alternative applications has approved a raft of levies on the industry, which will only render LPG a non-competitive product,” the association said.

Attempts made by the PPPRA to introduce price regulation without due procedure will negatively impact retail prices for the poor masses who are currently struggling to recover from the effect of the COVID-19 pandemic. In the best interest of all, NLPGA urged the PPPRA to rethink the levy and revert the status quo. 

Elsewhere on Ventures

Triangle arrow