FG Removes VAT on Diesel, Cooking Gas Imports

The Federal Government has revealed new tax incentives for offshore oil and gas production, aimed at increasing investment in the industry.

Additionally, it was announced that key energy products and infrastructure—such as diesel, feed gas, Liquefied Petroleum Gas, Compressed Natural Gas, electric vehicles, Liquefied Natural Gas infrastructure, and clean cooking equipment—will no longer be subject to value-added tax upon importation.

Olawale Edun, the Minister of Finance and Coordinating Minister of the Economy, made this announcement in a statement on Wednesday.

According to a statement from Mohammed Manga, Director of Information and Public Relations, these measures are expected to establish Nigeria’s deep offshore basin as a leading destination for international oil and gas investments, enhance energy security, and facilitate Nigeria’s shift to cleaner energy alternatives.

This policy announcement coincides with new divestment plans from ExxonMobil and Seplat, which President Bola Tinubu mentioned would soon receive governmental approval.

The statement noted, “As part of its commitment to enhance the nation’s upstream and downstream sectors, the Federal Government has launched significant concessions aimed at rejuvenating the industry.

“This comes as Mr. Olawale Edun, the Finance Minister and Coordinating Minister of the Economy, introduced two key fiscal measures designed to invigorate Nigeria’s oil and gas sector: the Value Added Tax Modification Order 2024 and the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, pursuant to the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024.”

Manga elaborated, stating, “The VAT Modification Order 2024 provides exemptions for various essential energy products and infrastructure, including diesel, feed gas, Liquefied Petroleum Gas, Compressed Natural Gas, electric vehicles, Liquefied Natural Gas infrastructure, and clean cooking appliances.

“These initiatives are intended to reduce living costs, enhance energy security, and expedite Nigeria’s transition to more sustainable energy sources.”

The announcement regarding tax incentives for deep offshore oil and gas projects highlights new tax relief measures, emphasizing that “this initiative seeks to establish Nigeria’s deep offshore basin as a top destination for global oil and gas investments.”

The ministry stated that these fiscal incentives demonstrate the administration’s unwavering dedication to fostering sustainable growth, improving energy security, and promoting economic prosperity for all Nigerians.

The statement concluded, “These reforms are part of a wider array of investment-focused policy initiatives led by President Bola Tinubu, in alignment with Policy Directives 40-42.

“They showcase the administration’s strong resolve to encourage sustainable growth in the energy sector and enhance Nigeria’s competitiveness in the global oil and gas market.

“With these ambitious initiatives, Nigeria is well-positioned to regain its status as a leader in the global oil and gas industry.”