Determined to arrest the spate of divestments in the nation’s oil and gas sector, the Federal Government (FG) has announced a new fiscal regime with a wide range of tax exemptions in the industry.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said the fiscal incentives were aimed at revitalizing Nigeria’s oil and gas sector.
The tax exemptions were contained in circulars titled: ‘Value Added Tax (VAT) Modification Order 2024’; and in the ‘Notice of Tax Incentives for Deep Offshore Oil & Gas Production’, which are in accordance with the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.
The VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
In addition, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production provides new tax reliefs for deep offshore projects.
The Minister said the concessions were expected to attract new and massive investments into the oil and gas and to revitalise the industry.
He added that the measures were designed to lower the cost of living, bolster energy security, and accelerate Nigeria’s transition to cleaner energy sources.
Mr. Edun expressed optimism that the initiative would reposition Nigeria’s deep offshore basin as a premier destination for global oil and gas investments.
He said the reforms were part of a broader series of investment-driven policy initiatives of President Bola Tinubu, in line with Policy Directives 40-42.
He added, “They reflect the administration’s strong commitment to fostering sustainable growth in the energy sector and enhancing Nigeria’s global competitiveness in oil and gas production.
“With these bold initiatives, Nigeria is firmly on track to reclaim its position as a leader in the global oil and gas market. These fiscal incentives demonstrate the administration’s unwavering commitment to fostering sustainable growth, enhancing energy security, and driving economic prosperity for all Nigerians”