FG Removes VAT on Diesel and Cooking Gas to Boost Energy Sector
Finance Minister, Olawale Edun
The Federal Government has announced new tax relief measures to encourage investment in Nigeria’s oil and gas sector. As part of this initiative, the government has stopped charging Value Added Tax (VAT) on key energy products such as diesel, cooking gas (LPG), Compressed Natural Gas (CNG), and electric vehicles.
Tax Exemptions for Key Energy Imports
The Minister of Finance, Wale Edun, shared this information in a statement on Wednesday. The new policy also covers the importation of clean cooking equipment, feed gas, Liquefied Natural Gas (LNG) infrastructure, and other energy products. The goal is to lower costs, improve energy security, and help Nigeria shift to cleaner energy sources.
Boosting Investment in Deep Offshore Oil & Gas
The government also introduced tax incentives for deep offshore oil and gas production. These incentives are aimed at making Nigeria’s offshore oil and gas fields more attractive to global investors. The tax reliefs are part of efforts to strengthen Nigeria’s position in the global energy market and increase investment in the sector.
The VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure, including diesel, feed gas, Liquefied Petroleum Gas, Compressed Natural Gas, electric vehicles, Liquefied Natural Gas infrastructure, and clean cooking equipment. These measures are designed to lower the cost of living, bolster energy security, and accelerate Nigeria’s transition to cleaner energy sources.” — Wale Edun, Minister of Finance
A Step Towards Cleaner Energy and Economic Growth
The VAT exemptions and tax incentives are expected to reduce energy costs for Nigerians, improve energy security, and support the country’s transition to cleaner energy. These reforms are part of a broader effort to revitalize Nigeria’s oil and gas industry and promote economic growth.
Government’s Commitment to Energy Security
The finance ministry emphasized that these measures show the government’s commitment to creating a sustainable energy sector, improving Nigeria’s competitiveness, and driving economic prosperity. The policy changes come alongside other plans, including new divestment approvals from major oil companies like ExxonMobil and Seplat. These tax exemptions and incentives reflect the government’s determination to position Nigeria as a global leader in the oil and gas market, ensuring long-term energy security and economic stability for all Nigerians.
In conclusion, the Federal Government’s decision to remove VAT on key energy products and introduce tax reliefs for deep offshore oil and gas production marks a significant step towards boosting investment in Nigeria’s energy sector. These initiatives aim to reduce energy costs, enhance energy security, and support the transition to cleaner energy. With these measures, the government is reinforcing its commitment to economic growth and positioning Nigeria as a leader in the global oil and gas market.
