Federal Government Abolishes VAT on Key Energy Products to Boost Investment and Tackle Economic Challenges

In a bid to encourage investment and address Nigeria's ongoing economic difficulties, the federal government has announced the abolition of the value-added tax (VAT) on critical energy products. These include compressed natural gas (CNG), automotive gas oil (diesel), and liquefied petroleum gas (LPG or cooking gas), alongside other relief measures.

The government also introduced VAT reliefs for the importation of essential energy items and infrastructure. This includes fuel, feed gas, electric vehicles, liquefied natural gas (LNG) infrastructure, and clean cooking equipment.

This announcement was made on Wednesday in a statement issued by Wale Edun, the Coordinating Minister of the Economy and Minister of Finance. The statement, signed by Mohammed Manga, the Director of Information and Public Relations, outlines the government's strategy to accelerate Nigeria’s transition to greener energy sources while also addressing the increasing cost of living.

Edun remarked, “The VAT Modification Order 2024 introduces exemptions on a range of key energy products and infrastructure, including diesel, feed gas, LPG, CNG, electric vehicles, LNG infrastructure, and clean cooking equipment."

He continued, “These measures are designed to lower the cost of living, enhance energy security, and speed up Nigeria’s transition to cleaner energy."

The minister emphasized that this initiative also aims to position Nigeria’s deep offshore basin as a premier destination for global oil and gas investments. He further described the tax incentives for deep offshore oil and gas production as offering new tax reliefs for deep offshore projects.

This development comes at a time of rising discontent among Nigerians regarding the country's escalating cost of living. The recent inflation rate, recorded at 32.15% in August 2024, has exacerbated concerns about economic stability.