Nigeria Customs Service Removes VAT, Import Duty on LPG and CNG to Boost Gas Utilization

 

The Nigeria Customs Service (NCS) has announced the removal of Value Added Tax (VAT) and the introduction of zero percent import duty on Liquefied Petroleum Gas (LPG), commonly known as cooking gas, and Compressed Natural Gas (CNG). This policy is part of the federal government’s efforts to enhance domestic gas utilization and improve Nigeria’s investment climate.

Abdullahi Maiwada, the NCS National Public Relations Officer, disclosed this in a statement on Wednesday, December 18, emphasizing that the measures align with the Presidential Gas for Growth Initiative spearheaded by President Bola Ahmed Tinubu.

The NCS statement highlighted several fiscal incentives:

1. Zero Import Duty: Machinery, equipment, and spare parts for gas utilization in Nigeria will now attract zero percent import duty. This applies to all CNG and LPG-related equipment brought into the country.
2. VAT Exemption: The following items are now zero-rated for VAT:
   • Feed gas for processed gas.
   • Imported LPG and CNG equipment components.
   • Conversion and installation services.
   • Equipment and infrastructure for the expansion of CNG, LPG, and the Presidential CNG Initiative, including conversion kits.

To benefit from these incentives, importers must obtain an Import Duty Exemption Certificate (IDEC) from the Federal Ministry of Finance. They are also required to secure a letter of support from the Office of the Special Adviser to the President on Energy.

The NCS also clarified that the importation of LPG under HS Codes 2711.12.00.00, 2711.13.00.00, and 2711.19.00.00 is exempt from both VAT and import duty. Furthermore, any Debit Notes issued to petroleum marketers importing LPG under these codes from August 26, 2019, to date will be withdrawn in accordance with prior approvals.

This development aims to foster growth in the domestic gas sector, promote cleaner energy alternatives, and reduce dependency on imported fuels. It is expected to provide significant cost savings for importers and consumers while driving investment in Nigeria’s gas infrastructure.

By implementing these incentives, the government underscores its commitment to creating a more favorable environment for sustainable energy and industrial growth in the country.