Tinubu signs executive order introducing performance based tax incentives to attract investors in oil and gas sectors

 

President Bola Ahmed Tinubu has signed a new executive order aimed at enhancing efficiency and attracting investment in Nigeria’s oil and gas sector. The Upstream Petroleum Operations Cost Efficiency Incentives Order 2025 introduces performance-based tax credits for upstream operators who achieve verifiable cost savings aligned with industry benchmarks. These benchmarks, categorized by terrain types such as onshore, shallow water, and deep offshore, will be published annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Eligible operators can receive tax credits up to 20% of their annual tax obligations upon demonstrating cost reductions .

This initiative is part of a broader strategy to create a more competitive and efficient oil and gas industry that benefits Nigerians. Analysts emphasize that the success of this measure depends on coordinated implementation among government agencies. While previous reforms, including a 25% gas utilization investment allowance and streamlined contracting procedures, have yet to prompt investment in new fields, they have encouraged some producers to re-engage with existing projects .

The executive order is expected to stimulate investment, reduce project costs, and increase revenue in Nigeria’s oil and gas sector, aligning with the government’s efforts to revitalize the industry and enhance its global competitiveness.