Soaring Gas Prices Dampen Yuletide Despite Tax Cuts, Expert Explains

 Soaring Gas Prices Dampen Yuletide Despite Tax Cuts, Expert Explains

Despite the Federal Government’s initiative to lower the price of Liquified Petroleum Gas (LPG), commonly known as cooking gas, prices have continued to rise even during the festive season.

Economist Ayo Anthony explained to the News Agency of Nigeria (NAN) in Abuja on Sunday that the impact of government policies on the economy takes time.

The Federal Government had announced the elimination of customs duty and Value-Added Tax (VAT) on LPG importation and its associated equipment in a letter dated November 28, 2023, signed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.

Earlier, Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, intervened in the constant price increments of cooking gas, forming a committee to recommend ways to boost supplies and lower prices. The 5kg cooking gas is currently priced between N4,750 to N4,900, and the 12.5kg is sold at N11,875 to N12,300 in the Federal Capital Territory (FCT), and up to N13,000 in Lagos.

Anthony attributed the delay in policy impact during the Yuletide to what is known as an inside and outside lag in economics. Inside lag refers to the time it takes for the government to decide on a problem, while outside lag is the time it takes for the decision to be implemented.

He also pointed out that the high cost of cooking gas during the Yuletide, despite the removal of VAT, is influenced by the existence of old gas stock.

Gas that marketers had stocked before the policy change would still be sold at the old price until the stock was exhausted, covering the cost of importation. Only when new stock is acquired at the prevailing price reflecting the government’s policy will prices see a reduction.

Recent data from the National Bureau of Statistics (NBS) reveals that the average price of 5kg cooking gas increased from N4,562.51 in October 2023 to N4,828.18 in November 2023. The average cost of refilling a 12.5kg cooking gas rose by 5.78 percent on a month-on-month basis from N10,545.87 in October 2023 to N11,155.15 in November 2023.

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