The Federal Government of Nigeria has introduced new tax relief measures aimed at encouraging investments in deep offshore oil and gas production, while also eliminating value-added tax (VAT) on essential energy products and infrastructure. This initiative is part of a broader plan to strengthen Nigeria’s energy sector and promote a transition towards cleaner energy sources.
Announced by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, the fiscal incentives are designed to position Nigeria’s deep offshore basin as a key destination for global oil and gas investments. The measures also include VAT exemptions on critical energy items such as diesel, feed gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), electric vehicles, and clean cooking equipment, all intended to lower living costs, enhance energy security, and accelerate the shift to greener energy sources.
The VAT exemptions and tax reliefs fall under the Value Added Tax Modification Order 2024 and the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, reflecting the government’s commitment to revitalizing both the upstream and downstream sectors of the energy industry.
These reforms come at a critical time, as Nigeria prepares to manage significant divestments from major players like ExxonMobil and Seplat, which are set to receive government approval soon. The statement also emphasized that these tax incentives are part of President Bola Tinubu’s broader policy initiatives aimed at promoting sustainable growth, driving economic prosperity, and reclaiming Nigeria’s position as a leader in the global oil and gas market.
By fostering a favorable investment climate and reducing barriers for essential energy infrastructure, the government hopes to ensure the long-term stability of Nigeria’s energy sector while contributing to the country’s economic development.
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