Nigerian President Bola Tinubu on Thursday, 26th of June, signed into law a set of landmark tax bills aimed at overhauling the country’s fiscal and revenue framework.
These reforms are part of a broader effort to unlock Nigeria’s economic potential and position it as a more attractive destination for global investment.
The presidential assent not only gives legal backing to several long-debated tax measures but also formally codifies three major energy-related executive orders issued between 2024 and 2025.
These include:
- Presidential Directive 40
- The 2024 VAT Modification Order
- The 2025 Upstream Petroleum Cost Efficiency Order
All have now been integrated into the Nigeria Tax Act, giving them permanent legislative authority.
Reacting to the development in a post on X (formerly Twitter), Olu Verheijen, Special Adviser to the President on Energy, stated that the reforms have already unlocked over$6 billion in new oil and gas investments.
“With their codification, the administration has delivered long-term certainty and regulatory clarity, ensuring these critical incentives are protected from future policy reversals.”
“It was a privilege to witness this historic moment, another bold step toward sustainable growth and shared prosperity for all Nigerians,” said Verheijen, who attended the signing ceremony at Aso Villa alongside other cabinet members.
Presidential directive 40
Introduced in 2024, this executive action was aimed at providing fiscal incentives for onshore and shallow water non-associated gas (NAG) projects and deep offshore oil and gas developments.
Key provisions include:
- A Gas Utilisation Investment Allowance (GUIA) on plant and equipment for new and ongoing midstream oil and gas projects.
- Companies can claim up to 25% of qualifying expenditures as allowable deductions from assessable profits in the year the equipment was purchased.
This measure targets the development of underutilized gas resources while promoting investment in infrastructure critical to Nigeria’s gas strategy.
VAT modification order 2024
This order provides value-added tax exemptions on a wide range of energy-related products aimed at lowering costs and encouraging cleaner energy use.
Among the 63 exempted items are:
- Diesel
- Cooking gas (LPG)
- Compressed natural gas (CNG)
- Feed gas
- Electric vehicles
- LNG infrastructure
- Clean cooking equipment
In practical terms, these products will no longer be subject to VAT collection by agencies such as the Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS).
Finance Minister Wale Edun explained that the move is intended to ease the cost of living, improve energy security, and accelerate Nigeria’s clean energy transition.
The policy measure also supports the government’s net-zero targets by 2060, including goals around reducing energy poverty and boosting renewable energy investment.
Upstream petroleum cost efficiency order 2025
This executive order focuses on reducing operational costs and improving efficiency in Nigeria’s upstream oil and gas sector.
Under the policy, companies that meet cost-reduction targets set by regulators are eligible for tax credits of up to 20%.
The order also promotes:
- Faster project execution
- Greater financial discipline in capital expenditure
- A globally competitive business environment
“This is not a pursuit of cost reduction for its own sake. It is a deliberate strategy to position Nigeria’s upstream sector as globally competitive and fiscally resilient,” said Verheijen.
“With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people.”
The order applies to licensees, lessees, and their contractors, underscoring the government’s broader aim to make Nigeria’s oil sector globally appealing.
How these reforms impact Nigeria’s oil sector
President Tinubu’s fiscal reforms are already bearing fruit.
Since their rollout, Nigeria has attracted an estimated $16–17 billion in foreign direct investment with the bulk going into upstream oil and gas development.
In 2024 alone, Nigeria accounted for three of Africa’s four Final Investment Decisions (FIDs) in the oil and gas sector, totaling more than $5 billion in new capital commitments.
This momentum has encouraged international oil majors to expand investment in deepwater assets, while also encouraging local operators to revive production from mature, previously idle assets.
These inflows not only boost energy production but also generate government revenue, stimulate economic growth, and contribute to poverty reduction across the country.
The way forward
Sustaining this wave of capital investment is vital.
In May, Verheijen warned that Africa could see a dramatic decline in upstream funding—from $340 billion (2011–2015) to under $130 billion between 2026 and 2030, if bold policy action isn’t taken.
She reminded African leaders and investors that capital follows competitive returns, not sentiment.
“Let’s be clear: capital has no passport. Sentimental appeals to ‘African capital’ are a distraction,” she said.
“Capital is opportunistic, not patriotic. It flows where risk-adjusted returns are competitive.”
With these reforms now fully enshrined in law, Nigeria is better positioned to cut red tape, reduce operational costs, and attract long-term investment.
The country holds 37 billion barrels of proven oil reserves and 210 trillion cubic feet of natural gas—much of which remains untapped.
These fiscal reforms could be the game-changer needed to finally unlock that potential.
