President Bola Ahmed Tinubu has taken a significant step towards enhancing the oil and fuel sector in Nigeria by signing a new government decree aimed at reducing costs for businesses, increasing funding, and boosting revenues. The decree, known as the
“2025 Profitability Incentives Order,”
introduces tax incentives based on performance, rewarding operators who achieve verifiable cost savings aligned with annual benchmarks set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The special advisor for economic vitality, Olu Verheijen, announced that this decree caps tax credits at 20% of each company’s annual tax liability. This measure ensures a balance between incentives for businesses and the preservation of public revenue. Verheijen emphasized that the goal is not just about cutting costs but strategically positioning Nigeria’s upstream sector as globally competitive and financially resilient.
Verheijen stated,
“It’s not about cost-cutting for its own sake. It’s a deliberate strategy to make Nigeria’s upstream sector globally competitive and fiscally resilient. With this reform, we reward efficiency, enhance investor confidence…”
This reform is part of a broader set of economic reforms initiated by President Tinubu’s administration since 2023. These reforms include ending fuel subsidies, devaluing the naira, and improving tax collection processes. Consequently, these initiatives have helped reduce the budget deficit from 5.4% of GDP in 2023 to 3.0% in 2024.
In addition to sector-specific reforms, President Tinubu has sought Parliament approval for a substantial external loan exceeding $21.5 billion to finance the 2025-26 budget plan. This move towards international financing aligns with the government’s comprehensive strategy to bridge financial gaps while supporting Nigeria’s economic growth.
The Nigerian authority aims through these reforms not only to enhance global competitiveness within the sector but also to create job opportunities and maximize value for its citizens.
As experts weigh in on these developments, many see them as crucial steps towards positioning Nigeria favorably in the competitive global energy market.
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