The Federal Government on Wednesday unveiled two major fiscal incentives aimed at revitalizing Nigeria’s oil and gas sector production capacity.
The two laws were described as groundbreaking concessions aimed at revitalizing the industry.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the new regulations were the Value Added Tax (VAT) Modification Order 2024 and the Notice of Tax Incentives for Deep Offshore Oil & Gas Production in accordance with the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.
Edun said in a statement in Abuja that the VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure, including automated gas oil (AGO), otherwise called diesel; Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
The Minister said these measures were designed to lower the cost of living for consumers, bolster energy security, and accelerate Nigeria’s transition to cleaner energy sources.
Also, he said the Notice of Tax Incentives for Deep Offshore Oil & Gas Production provides new tax reliefs for deep offshore projects in the country.
This initiatives, he pointed out, were aimed at positioning Nigeria’s deep offshore basins as a premier destination for global oil and gas investments.
Due to incessant pressures in continental and onshore operational areas as a result of increasing attacks and vandalism of oil facilities in the country’s Niger Delta region, multinational oil companies have practically moved their operations to deep offshore locations, leaving the onshore areas and shallow waters for indigenous players.
To encourage more investments in deep offshore waters as part of efforts to boost the country’s oil and gas production capacity, the government has initiated a number of reforms in the industry.
Edun explained that these reforms were part of a broader series of investment-driven policy initiatives championed by President Bola Ahmed Tinubu, in line with his administration’s Policy Directives 40-42.
He said the reforms 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.
Besides, he said these were part of the government’s avowed determination towards to boost the nation’s upstream and downstream sector capacity.
“With these bold initiatives, Nigeria is firmly on track to reclaim its position as a leader in the global oil and gas market,” the Minister said, adding that these fiscal incentives demonstrate the administration’s unwavering commitment to fostering sustainable growth, enhancing energy security, and driving economic prosperity for all Nigerians.
Although the country currently produces less than two million barrels of oil per day, its aspiration is to grow its production capacity to about 3 million barrels per day by 2025.
