Nigerian government introduces Fiscal incentives to enhance energy security

The Nigerian government says it has introduced fiscal incentives that will attract the much-needed investments to enhance energy security, catalyse economic activity, attract essential foreign exchange, and promote job creation.

The Special Adviser on energy to the Nigerian President, Mrs Olu Verheijen made the assertion during a media parley on the policy direction of government in Abuja.

She posited that 76% of the country’s gas reserves, remain undeveloped despite possessing one of the largest gas reserves globally.

“We lack sufficient gas to meet our domestic needs for industry, for power and for cooking. The fiscal incentives introduced will attract the much-needed investments to enhance energy security, catalyze economic activity, attract essential foreign exchange, and promote job creation’’.

She explained that deliberate effort are in place to streamline contracting processes, procedures and timelines which had been an impediment to attracting investment to the sector.

“The President has issued directives to reduce contracting timelines and project delivery. Benchmarking and analysis revealed that the contracting cycle takes up to 36 months. This Directive should have the effect of compressing this cycle to less than 6 month in line with global averages. This will expedite the delivery of oil and gas products to the market and enhance overall value for the country.

“This Directive seeks to ensure that local content requirements are implemented in a manner that does not impede investments or the cost competitiveness of oil and gas projects. This Directive aims to reduce the cost premium of operating in Nigeria, presently averaging at 40%. We anticipate significant benefits from this reform, including the development of local companies’ capacity, thereby generating additional business opportunities, job creation and boosting economic growth.”

Mrs. Verheijen reiterated government’s determination to take decisive steps to ensure to a conducive business climate and reposition Nigeria as a preferred investment destination for oil and gas sector.

“The President strongly believes that private sector-led growth enabled by clear and inclusive government policies is the most enduring path to prosperity for all Nigerians.We will sustain engagement and collaboration with key investors to ensure we attract capital and capabilities to this sector to catalyze job creation, productivity, income growth across multiple sectors. This administration is laser focused on enabling transformational economic opportunities to lift millions of hardworking Nigerians out of poverty.”

Some stakeholders were consulted and provided input to implement reforms. These are:The Minister of Finance/Co-ordinating Minister of the Economy will develop and propose amendments to introduce fiscal incentives for deep-water developments into legislation, the Federal Inland Revenue Service (FIRS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will issue guidelines on the implementation of the fiscal incentives, the MOFI, MOPI, Nigerian Content Monitoring and Development Board, NNPCL will be responsible for implementation and enforcement and the NCDMB is responsible for implementing the Directive and issuing supporting guidelines.