FG Removes VAT on Diesel, Cooking Gas to Boost Energy Sector

The Federal Government of Nigeria has announced significant tax reliefs aimed at revitalizing the oil and gas sector, with the removal of Value Added Tax (VAT) on key energy products like diesel, Liquefied Petroleum Gas (LPG), and clean cooking equipment. The new policy also covers other energy-related imports, including Compressed Natural Gas (CNG), electric vehicles, and Liquefied Natural Gas (LNG) infrastructure.

This announcement was made on Wednesday by the Minister of Finance and Coordinating Minister for the Economy, Olawale Edun, in a statement released by the ministry. The directive forms part of a broader strategy to attract investments into Nigeria’s deep offshore oil and gas industry, positioning the country as a top destination for global energy investors.

The Ministry’s Director of Information, Mohammed Manga, emphasized that these new fiscal measures aim to bolster energy security, lower the cost of living, and accelerate Nigeria’s shift towards cleaner energy sources. The reforms also align with President Bola Tinubu’s economic vision, aimed at driving sustainable growth in the energy sector.

Edun unveiled two key initiatives, including the Value Added Tax Modification Order 2024 and the Notice of Tax Incentives for Deep Offshore Oil & Gas Production. These policies are designed to enhance both upstream and downstream sectors of the oil and gas industry, supporting Nigeria’s transition to more sustainable energy.

In the wake of ExxonMobil and Seplat’s recent divestment announcements, which have received the president’s approval, these fiscal incentives are expected to attract further investment into the deep offshore oil projects and solidify Nigeria’s role in the global energy market.

“These measures show the government’s commitment to fostering sustainable growth, promoting energy security, and driving economic prosperity,” the statement concluded.