LCCI: Exemption of cooking gas, diesel from VAT will reduce cost of living

The Lagos Chamber of Commerce and Industry (LCCI) says the federal government’s decision to introduce incentives in the oil and gas sector will lower the operational costs for industries, reduce the overall cost of living for Nigerians, and increase access to clean energy.

On October 2, the federal government announced it had introduced incentives, including value-added tax (VAT) modification order 2024 and notice of tax incentives for deep offshore oil and gas production.

Chinyere Almona, LCCI’s director-general (DG), in a statement on Saturday, said the incentives would revitalise the oil and gas sector.

“Implementing the Value Added Tax Modification Order 2024 and Notice of Tax Incentives for Deep Offshore Oil & Gas Production are significant fiscal incentives that can revitalize Nigeria’s oil and gas sector,” Almona said.

Almona said the high cost of diesel has placed an excessive burden on the manufacturing sector, logistics, and transportation for an extended period of time, noting that cooking gas, a cleaner and healthier alternative for households, has been made less affordable by VAT impositions.

“This policy shift will undoubtedly lower the operational costs for industries, reduce the overall cost of living for Nigerians, and increase home access to clean energy,” Almona said.

“The successful transition to CNG mobility definitely requires all the possible incentives to speed up the deployment. The tax reliefs for deep offshore oil and gas production could boost oil and gas sector investments.

“The business community is upbeat about the government’s efforts towards transitioning to Compressed Natural Gas (CNG) as an alternative fuel for mobility.”

LCCI RECOMMENDS EXPANSION OF CNG INFRASTRUCTURE, POLICY EDUCATION

As the country continues to embrace the transition, the chamber made recommendations to ensure that the shift to CNG mobility is seamless, efficient, and impactful in reducing costs for Nigerians.

“To achieve the desired widespread adoption of CNG, it is critical to establish and expand the infrastructure for CNG refuelling stations across the country,” LCCI said.

Currently, the chamber said access to CNG refuelling points is limited, creating a barrier to adoption.

“The success of CNG mobility depends heavily on public acceptance and understanding of its benefits,” LCCI said

“A comprehensive awareness campaign should be launched to educate citizens and businesses on the cost undoubtedly lower the operational costs for industries, reduce the overall cost of living for Nigerians, and increase home access to clean energy to individuals, cost savings for the government, and the positive environmental impact of CNG adoption.

“Transitioning to CNG requires vehicle modifications, which can be cost-prohibitive for individuals and small businesses.”

The chamber advised the government to consider creating incentives or subsidies for vehicle owners to convert their engines to run on CNG.

“The shift to CNG presents an opportunity for job creation in the energy and automotive sectors,” LCCI said.

“We need programmes to equip existing mobility entrepreneurs like mechanics, road transport workers, and commercial bus drivers with the necessary skills for CNG-related jobs, from vehicle conversions to infrastructure maintenance and operation.”

LCCI also said it anticipates the full implementation of naira payments for crude oil sale to the Dangote refinery and other local refineries, scheduled to start on October 1.

“This move will herald a significant milestone in Nigeria’s economic transformation,” the chamber said

“We urge the government to sustain the political will to be consistent with the reforms in the oil and gas sector and implement the Petroleum Industry Act (PIA) fully.

“We see the long-term gains of these reforms if they are implemented under a conducive regulatory environment.

“Removing VAT on diesel and cooking gas is a bold step towards reducing the cost of living for Nigerians, but it is only the beginning.”

LCCI said the transition to CNG mobility offers an opportunity to make energy more affordable, reduce emissions, and create jobs.