- The Nigerian government has announced VAT exemptions on key energy products, including diesel, LNG, CNG, and electric vehicles, to reduce prices and enhance energy security.
- Minister Wale Edun also introduced tax incentives for deep offshore oil operations, aiming to position Nigeria’s offshore basin as a leading destination for global oil and gas investments.
The Federal Government of Nigeria has unveiled value-added tax (VAT) exemptions on several essential energy products, including diesel, Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), and electric vehicles. According to a statement from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, this initiative aims to lower prices and enhance energy security in the country.
In a statement released on Wednesday, October 2, 2024, Edun outlined the exemptions as part of broader measures designed to alleviate Nigerians’ cost of living while accelerating the transition to cleaner energy sources.
“The VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment,” he explained.
The decision to exempt these products from VAT reflects the government’s commitment to promoting sustainable energy practices and reducing the financial burden on citizens. The focus on cleaner energy aligns with Nigeria’s broader environmental goals, which include increasing the use of renewable energy sources and improving air quality.
In addition to the VAT exemptions, Edun also announced tax incentives targeting deep offshore oil operations and gas production under the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024. These incentives aim to position Nigeria’s deep offshore basin as a prime destination for global oil and gas investments, attracting foreign capital and fostering economic growth.
The Nigerian government has faced mounting pressure to address the rising cost of living, mainly due to fluctuating global energy prices and local economic challenges. By implementing these VAT exemptions and tax incentives, officials hope to create a more favourable economic environment that encourages energy production and consumption.
Edun’s statement highlights the government’s recognition of the crucial role that affordable energy plays in Nigerians’ everyday lives. The initiatives are expected to stimulate investment in infrastructure, improve energy access, and ultimately lead to a more stable energy market.
As the country navigates its energy landscape, these policy measures represent a significant step toward enhancing energy security and promoting economic resilience. The government’s commitment to cleaner energy sources may help Nigeria fulfil its international climate obligations, contributing to a more sustainable future for all its citizens.