Nigeria’s National Gas Expansion Program would require heavy gasoline taxes: World Bank

Nigerian National Gas Expansion Program (NGEP) would require heavy taxes on gasoline.

This is according to the World Bank in its Nigeria Public Finance Review Report recently released. The report states thatsubstituting gasoline for compressed natural gas (CNG) in Nigeria would be time consuming and would also require heavy taxes on gasoline for financial sustainability.

In 2020, the Nigerian government introduced the NGEP, which had three goals: to convert up to 1 million vehicles in the country from gasoline to compressed natural gas, to use natural gas for industries, and to use LPG for clean cooking.

Inadequate infrastructure: According to the World Bank report, the distribution infrastructure available for CNG in the short term is such that the conversion would replace less than 10% of the gasoline currently consumed in Nigeria. The report says:

  • “International experience points to several potential problems with this proposal. First, the conversion process for a million vehicles will probably take years.
  • “Second, locating the pipelines in the south poses regional challenges, as northern states would have to rely on trucked-in liquefied natural gas, which substantially increases the cost of supply.
  • “Third, in all the successful CNG conversion programs in other parts of the world, CNG has displaced fuels that are heavily taxed, and yet in Nigeria, there is no immediate plan to start heavily taxing CNG. gasoline”.

The report argues that the aforementioned high taxes are necessary because CNG vehicles are more expensive than gasoline or diesel vehicles, and vehicle owners must be able to recoup the cost of vehicle conversion or the higher purchase price. of an equivalent CNG vehicle through a reduction in fuel consumption. prices.

However, Nigeria’s tax regime remains problematic, and when it comes to citizen participation, corporate and household tax morale is low. The report provides three reasons why this is the norm:

  • There is limited knowledge and little information readily available about the tax system. There is a low understanding and weak implementation of Nigeria’s tax policy and inadequate clarity about current tax laws, resulting in widespread ignorance, confusion and frustration about different taxes.
  • Nigeria’s tax collection system is often inefficient, opaque and corrupt. The negative experience reported by both individuals and companies in dealing with the tax system and with tax officials creates apathy even among those who are willing to pay taxes. Even where the technology has been adopted, there is dissatisfaction with the electronic filing platform and the processes for filing returns. When the tax is finally collected, there is a tedious dispute resolution and appeal process, double/multiple taxation cases, and irregular tax administration practices.
  • Most households and small businesses point to a broken social contract and little trust in a government that shows little transparency or accountability in the use of taxes. The level of satisfaction with local services among Nigerians is very low.

For the record: the NGEP The proposal is to subsidize the entire cost of the first million conversions, thus replacing one subsidy with another. Conversions may not be completely free to the first million vehicle owners because vehicles will need to be inspected and possibly repaired prior to conversion to protect the technical integrity of the vehicle conversion.

… Nigeria’s National Gas Expansion Program would require heavy taxes on gasoline: World Bank Read more in … Naijaonpoint.

Leave a Comment