Despite the Nigeria’s government initiatives to reduce the cost of Liquified Petroleum Gas (LPG), commonly known as cooking gas, the prices continue to rise, according to Economist Dr. Ayo Anthony. Speaking to the News Agency of Nigeria (NAN) in Abuja, Dr. Anthony emphasized that the impact of government policies takes time to manifest in the economy.
The government had announced the elimination of customs duty and Value-Added Tax (VAT) on the importation of LPG and its associated equipment in a directive dated November 28, 2023, signed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy. Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, intervened earlier to address the constant price increases of cooking gas, establishing a committee to recommend measures to bolster supplies and lower LPG prices, according to Leadership.
Despite these efforts, a 5kg cooking gas cylinder is currently sold at prices ranging from N4,750 to N4,900, while a 12.5kg cylinder is sold at N11,875 to N12,300 in the Federal Capital Territory (FCT).
Dr. Anthony explained the delay in witnessing the effects of government policies, referring to inside and outside lag in economics. Inside lag refers to the delay in the government’s decision-making process, and outside lag denotes the time for the decision to be implemented. Bureaucratic procedures introduce further delays in execution.
The economist highlighted that despite the government’s policy to eliminate VAT from gas importation, the persistent high cost is influenced by existing stocks of older gas. Dr. Anthony noted that cooking gas in stock with marketers before the policy change will be sold at the old price to cover the initial importation cost. Sellers are expected to adjust prices only when they purchase new stock at the updated rates reflecting the government’s policy change.
Recent data from the National Bureau of Statistics (NBS) indicates an increase in the average price of 5kg of cooking gas from N4,562.51 in October 2023 to N4,828.18 in November 2023. The average cost of refilling a 12.5kg cooking gas cylinder also rose by 5.78% on a month-on-month basis during the same period.