FG Stops VAT on Diesel, Cooking Gas to Boost Investments

The Federal Government has introduced new tax incentives aimed at driving investment in Nigeria’s deep offshore oil and gas production. This includes exemptions from value-added tax (VAT) on essential energy products and infrastructure such as diesel, feed gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), electric vehicles, Liquefied Natural Gas (LNG) infrastructure, and clean cooking equipment.

Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, revealed these measures in a statement on Wednesday. Signed by the Director of Information and Public Relations, Mohammed Manga, the announcement highlighted that the initiative is designed to attract global investments to Nigeria’s deep offshore oil and gas sector, strengthen energy security, and accelerate the nation’s shift towards cleaner energy solutions.

This policy coincides with divestment plans from major oil firms ExxonMobil and Seplat, which are expected to receive ministerial approval in the coming days, according to President Bola Tinubu.

The statement noted the government’s commitment to revitalizing Nigeria’s upstream and downstream oil and gas sectors through innovative concessions. The VAT Modification Order 2024 and the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, as outlined in the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024, are key components of this effort.

Manga explained that the VAT Modification Order 2024 introduces exemptions on several critical energy products and infrastructure, aimed at reducing the cost of living, enhancing energy security, and supporting Nigeria’s transition to cleaner energy.

Additionally, the Notice of Tax Incentives for deep offshore production introduces tax reliefs for new projects in this sector, positioning Nigeria’s deep offshore basin as a top global destination for oil and gas investments.

The government emphasized that these reforms are part of a larger strategy to drive sustainable economic growth, strengthen energy security, and improve Nigeria’s global competitiveness in the oil and gas industry. The initiatives are also aligned with President Bola Tinubu’s Policy Directives 40-42, underscoring the administration’s focus on fostering investment-driven growth in the energy sector.