FG Scraps VAT on Cooking Gas, Diesel

Nigeria’s Federal Government Removes VAT on Diesel and Cooking Gas to Boost Energy Sector.

The Nigerian government has announced the removal of Value Added Tax (VAT) on diesel, cooking gas, and other key energy products, effective immediately. This move, as stated by Mohammed Manga, Director of Information and Public Relations at the Ministry of Finance, aims to revitalize Nigeria’s oil and gas sector and bolster investor confidence.

Key Exemptions:

– Diesel: VAT removal expected to lower costs for industries and consumers
– Liquefied Petroleum Gas (LPG): Exemption to promote cleaner energy alternatives
– Compressed Natural Gas (CNG): Relief for transportation and industrial sectors
– Electric Vehicles: Encouraging sustainable transportation options
– Liquefied Natural Gas (LNG) infrastructure: Boosting Nigeria’s LNG production capacity
– Clean Cooking Equipment: Promoting healthier cooking practices

According to Manga, these exemptions are designed to lower the cost of living, enhance energy security, and accelerate Nigeria’s transition to cleaner energy sources. The government also introduced tax incentives for deep offshore oil and gas production to attract global investments.

Government’s Objective:
President Bola Ahmed Tinubu’s administration aims to position Nigeria’s deep offshore basin as a premier destination for oil and gas investments, fostering sustainable growth in the energy sector and enhancing Nigeria’s global competitiveness. This move is part of the administration’s broader investment-driven policy initiatives, aligning with Policy Directives 40-42.

Reactions to the announcement have been mixed, with some expressing skepticism about the effectiveness of the VAT removal in reducing prices. Others see this as a positive step towards revitalizing Nigeria’s energy sector and improving the economy.