Determined to counter the trend of divestments in Nigeria’s oil and gas sector, the Federal Government (FG) has introduced a new fiscal regime featuring a wide range of tax exemptions aimed at revitalizing the industry.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, stated that these fiscal incentives are essential for reinvigorating Nigeria’s oil and gas sector. The tax exemptions are detailed in circulars titled “Value Added Tax (VAT) Modification Order 2024” and the “Notice of Tax Incentives for Deep Offshore Oil & Gas Production,” aligned with the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.
The VAT Modification Order 2024 introduces exemptions on several 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.
Additionally, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production offers new tax reliefs specifically for deep offshore projects.
Mr. Edun emphasized that these concessions are anticipated to attract significant new investments into the oil and gas sector and to revitalize the industry. He noted that the measures are designed to lower the cost of living, enhance energy security, and expedite Nigeria’s transition to cleaner energy sources.
The Minister expressed optimism that the initiative would reposition Nigeria’s deep offshore basin as a premier destination for global oil and gas investments.