The tax could support a rise in LPG exports in an effort to reduce domestic fuel consumption, writes Efcharis Sgourou
Algeria's government has reversed a more-than-decade-old tax exemption for autogas vehicles that helped drive rapid growth in the sector, potentially signalling a move to prioritise LPG availability for the export market.
Under the 2026 finance bill, effective from 1 January, LPG-fuelled vehicles in Algeria are subject to the same annual automobile tax that petrol and diesel cars must pay. The exemption for autogas was introduced in the early 2010s to encourage motorists to switch to abundant supplies of domestically produced LPG, reducing reliance on costlier refined products. This lifted Algeria's autogas demand to more than 2mn t last year from below 300,000t in 2024, while the country's autogas car fleet exceeded 1mn by 2024, having been just over 200,000 in 2014, according to Argus Consulting. Algeria's total LPG demand stood at about 3.4mn t last year, while production was 9.6mn t, Argus Consulting data show.
The legislation attributes the strong growth in domestic autogas consumption in the past 10 years to steady increases in petrol and diesel prices over 2016-20, which widened the discount LPG held over the fuels and encouraged motorists to convert gasoline vehicles to autogas. The document also highlights that LPG production is tied to upstream oil and gas activity and refinery output, meaning domestic consumption affects the volumes available for export. The tax exemption for autogas had been a sign of the country's support for expanding domestic consumption as well as its attempt to lower gasoline imports.
Autogas vehicles under three years old are required to pay an annual tax of 10,000–25,000 dinars ($77–194), those 3-6 years old will be charged AD6,000–20,000, those 6-10 years old will pay AD4,000–15,000 and vehicles older than 10 years will pay AD3,000–10,000. Although LPG vehicles lose their exemption, compressed natural gas, electric and hybrid vehicles remain tax free.
The tax could affect local demand by raising costs and by removing the incentive to own an autogas vehicle, potentially halting the recent expansion of the country's autogas fleet — comprising converted gasoline vehicles. The government will benefit from the additional revenue from the more than 1mn autogas vehicles on the road. But it may also signal a broader strategic move to target more LPG exports in the coming years. State-owned Sonatrach had yet to respond to a request for comment at the time of publication. Algeria is a key LPG supplier to Mediterranean markets and has started shipping more to China as of last year. Domestic autogas demand represents about a fifth of the country's LPG output.
Home and away
Sonatrach is responsible for LPG production in Algeria, while its trading arm SPC, based in London, exports internationally. The company aims to balance domestic use with targeted export growth, Sonatrach gas marketing division director Samia Hamadache and SPC LPG trading general manager Idir Ait-Feroukh said in November. "Supplying local demand remains a priority. At the same time, Algeria is a trusted exporter... [so] striking the right balance is important," they said.
Algeria's LPG exports are set to rise to nearly 6.3mn t by 2028, and fall by 2040, to stand at about 4.5mn t, Argus Consulting says. But this coincides with growth in autogas use, rising each year until it nears 3mn t by 2040, while production peaks at 10mn t in 2029 and falls to 8.8mn t, from 9.5mn t in 2025.
Some market participants see Algerian exports to regional markets nearing a ceiling as US supply could gain market share. More Russian LPG from a new Baltic Sea terminal at Ust-Luga capable of loading VLGCs from later this year will add to competition in the region, notably from Turkey. This could free up more LPG to be shipped to Asia-Pacific. Algeria's exports to China rose to 800,000t last year, up by nearly 50pc from about 500,000 t/yr in 2022-24, Kpler data show.
