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Nigeria Unveils New Fiscal Incentives To Revive Oil and Gas Industry, Targets $10 Billion Investment

Nigeria has launched new fiscal incentives for the oil and gas sector with a 4 million bpd oil production target.

The federal government on Tuesday officially launched a new set of fiscal incentives to rejuvenate Nigeria’s ailing oil and gas industry, stressing that it aims to attract about N10 billion in investment between the next 12 months to 18 months.

It was learnt that the presidential directives were developed and coordinated by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, to ensure a competitive framework for the Nigerian oil & gas industry.

The consolidated guidelines for the fiscal incentives, a statement emanating from the event said, are based on extensive collaboration across the Finance and Petroleum Ministries.

According to the statement, it involved several key regulatory bodies, including the Federal Inland Revenue Service (FIRS), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Speaking at the event, Verheijen stated that the new measures had been designed to deliver a competitive Internal Rate of Return (IRR) for oil & gas projects and attract over $10 billion in new investments within the next 12-18 months.

She explained that they also underscore Nigeria’s commitment to reaching its long term oil production target of 4 million barrels per day, while enhancing the reliability of gas supply to boost export earnings and fuel Nigeria’s industrialisation.

Verheijen disclosed that among the guidelines signed were the NUPRC Guideline on Hydrocarbon Liquids Content in a Non-Associated Gas (NAG) Field, essential for accurately categorising and quantifying the hydrocarbons liquid content in the fields.

Additional guidelines, she said, focused on the applicability of tax credits and allowances for Non-Associated Gas Greenfield Development and the Midstream Capital and Gas Utilisation Allowance, providing taxpayers with clarity on the computation of the benefits.

Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who presided over the signing ceremony at the Federal Ministry of Finance headquarters in Abuja, admitted that the sector had stagnated over the last decade.

He endorsed the consolidated guidelines for the implementation of fiscal incentives for the oil & gas sector – a cornerstone of the presidential directive aimed at enhancing the Nigerian oil & gas sector’s global competitiveness while stimulating economic growth.

Edun thanked President Bola Tinubu for signing the directive in February 2024 to engender growth in the Nigerian oil and gas sector, which he said had stagnated for over the last 10 years.

 “The idea is to create an atmosphere conducive to international competitiveness such that investment comes in. And in this case, we know it’s Foreign Direct Investment (FDI),” he stated.

The signing ceremony was attended by various stakeholders, including the Nigerian National Petroleum Company Limited (NNPC), Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG).

This, it said, further highlighted Nigeria’s unified approach toward reinvigorating its oil and gas sector.

Emmanuel Addeh

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