May 30, 2024

Federal Govt unveils oil & gas fiscal incentives, focuses $10bn Investment


Ilenre Irele

In a bid to give teeth to the ongoing revitilisation of the oil and gas industry’s contribution to the Nigerian Economy, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, Tuesday presided over a signing ceremony at the Federal Ministry of Finance headquarters in Abuja endorsing 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 whilst stimulating economic growth.

As announced during the disclosed during the signing process, the Presidential Directives were developed and coordinated by the Special Adviser to the President on Energy, Olu Verheijen to ensure a competitive framework for the Nigerian oil & gas industry. These Consolidated guidelines for the fiscal incentives are based on extensive collaboration across Finance and Petroleum Ministries and 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).

According to Verheijen, these new measures have 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.

They also underscore Nigeria’s commitment to reaching its long term oil production target of 4 million barrels per day whilst 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 hydrocarbon liquid content in these fields. Additional guidelines 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 these benefits.

Edun, in his remarks, thanked President Bola Ahmed Tinubu for signing the directive in February 2024 to engender growth in the Nigerian oil and gas sector, which had stagnated for over the last decade. He also emphasised the potential of the guidelines, saying.

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