Details have emerged about why President Bola Tinubu signed the order of “upstream oil operations (efficiency cost incentives), 2025”.
The president, Tribune Online gathered, signed the order to end the high operating costs in the Nigerian oil and gas sector, compared to the global average.
This is contained in a document obtained by the Nigeria news agency (NAN) of the Office of the Special Advisor of the Energy President in Abuja.
According to the document, the high operating cost arose mainly from the execution of prolonged projects and the local content requirements.
“The president, in response to high operating costs, issued policy directives on the reduction of the operating costs of the oil and gas sector, the contracting deadlines and the requirements for compliance with local content
“The federal government of Nigeria is committed to the efficient management of oil resources and the reduction of costs in upstream oil operations to improve competitiveness and efficiency.
“It has become necessary to provide additional measures to promote fiscal discipline, reduce operating costs and maximize Nigerian economic gains of upstream oil operations.
“This will be done through monitoring
Mechanisms and appropriate incentive regime ”, the document is read partly.
The order was issued in the exercise of the powers conferred to the President by section 5 (1) of the 1999 Constitution.
The order was also in line with the president's powers in sections 23 (2) and 89 of the Income Tax Law of the Companies, Cap C21, Laws of the Federation of Nigeria, 2004.
“The incentives established in accordance with this order will cease to take effect on May 31, 2035, unless the president extends or modifies otherwise.
“If any tax credit granted but not used by any tenant or licensee at the expiration date, it will become invalid and inapplicable,”
In a statement issued on Friday, by Mrs. Olu Verheijen, special advisor to the President of Energy, said the order presents fiscal incentives based on performance for ascending operators who offer verifiable cost savings that comply with the reference points of the industry defined.
The special advisor said the order returns to investors 50 percent of the gain of the incremental government resulting from cost savings
She said the order also limits the tax credits available to 20 percent of the annual fiscal obligation of a company, which protects government income and at the same time offers strong tax terms to encourage efficient operators.
“This is not a search for cost reduction by itself. It is a deliberate strategy to position the upstream of Nigeria as a globally and fiscally resistant competitive.
“With this reform, we are rewarding efficiency, strengthening investor confidence and, ultimately, providing greater value to Nigerian people.
“The new order is based on the Directives of Presidential Reform of the 2024 Administration that offered better fiscal terms, shortened projects of the project and aligned local content policies with global best practices,” he said.
Verheijen said that the president has commissioned his office to lead the inter -institutional coordination of the order to guarantee effective implementation and translation into measurable results.