The Federal Government Eliminates VAT On Diesel And Cooking Gas

The Federal Government of Nigeria has announced new tax reliefs aimed at boosting investments in deep offshore oil and gas production. These reforms are part of a broader initiative to enhance energy security and accelerate the country’s transition to cleaner energy sources. The key measures, as outlined by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, include exemptions from value-added tax (VAT) on critical energy products and infrastructure, such as diesel, feed gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), electric vehicles (EVs), Liquefied Natural Gas (LNG) infrastructure, and clean cooking equipment.

The announcement aligns with ongoing efforts to position Nigeria’s deep offshore basin as a prime destination for global oil and gas investments, especially amidst divestment plans from major energy companies like ExxonMobil and Seplat. The reforms aim to lower the cost of living, support energy security, and promote a cleaner energy future. These incentives are expected to spur growth in both the upstream and downstream oil and gas sectors, with the potential to revitalize Nigeria’s oil and gas industry as a global leader.

The government’s fiscal measures, including the “Value Added Tax Modification Order 2024″ and the “Notice of Tax Incentives for Deep Offshore Oil & Gas Production,” reflect the administration’s commitment to sustainable economic development and enhancing Nigeria’s global competitiveness. According to the Minister of Finance, these policies are central to President Bola Tinubu’s broader economic agenda, designed to drive growth and prosperity for all Nigerians.