FG Announces Tax Exemptions For Oil And Gas Sector

The Federal Government has in a bid to halt the series of divestments occurring in the country’s oil and gas sector, unveiled a new tax framework offering extensive tax breaks for the industry.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, mentioned in a statement issued on Wednesday that these tax incentives are designed to rejuvenate Nigeria’s oil and gas industry.

It was noted in the statement issued through Mohammed Manga, Edun’s Director of Information and Public Relations, that these tax breaks are outlined in: Value Added Tax (VAT) Modification Order 2024; and Notice of Tax Incentives for Deep Offshore Oil & Gas Production, as per the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.

The Value Added Tax (VAT) Modification Order 2024 grants exemptions for a variety of essential 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.

Furthermore, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production introduces new tax benefits for deep offshore projects.

The Minister said 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.

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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 said, “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”