• Tuesday, May 28, 2024
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Nigeria lures investors with tax breaks for new refineries

Nigeria lures investors with tax breaks for new refineries

The Nigerian government has announced a package of tax breaks and incentives for investors building new refineries in the country, as a measure to boost its domestic refining capacity and reduce dependence on importation.

The ministry of petroleum resources (Gas), on Tuesday, identified finance and investment in infrastructure as critical to the development of the gas sector while offering a three-year tax waiver for companies that build and operate gas pipelines.

According to Ekperipe Ekpo, the minister of state petroleum (Gas), the tax could be extended to five years at the satisfaction of the ministry of petroleum resources.

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He spoke at the ongoing 8th Sub-Saharan Africa International Petroleum Exhibition and Conference in Lagos, organised by the Petroleum Technology Association of Nigeria.

Ekpo said: “As part of the tools to address this problem, the Midstream and Downstream Gas Infrastructure Fund was put in place to enable the government to make equity investment in gas Infrastructure.

“As we gather to harness ideas to develop our energy sector, let us not forget the various incentives put in place by the government to encourage the gas sector development.

“These include three-year tax waivers for companies that build and operate gas pipelines and could be extended to five years at the satisfaction of the ministry of petroleum resources. Recently, the president approved the zero duty and value-added tax for imported compressed natural gas (CNG) and liquefied natural gas (LNG).”

In December 2023, the FG approved a zero percent VAT waiver on feed gas for all processed, CNG, and imported liquefied petroleum gas, which took immediate effect.

The VAT-free waiver also encompasses CNG equipment components, conversion and installation services, liquefied petroleum gas (LPG) equipment components, conversion and installation services, as well as all equipment and infrastructure related to the expansion of CNG, LPG, and the Presidential CNG Initiative, including conversion kits.

According to the minister, all these are geared towards deepening gas penetration in Nigeria.

“The responsibility of developing our energy resources does not depend on Government alone. It calls for collaboration, knowledge sharing, and commitment on the part of the private sector industry players too as the government makes the right policies and creates the enabling environment for businesses to thrive.”

The minister also called for collaboration to support existing government initiatives as the country anticipates the kick-start of critical infrastructure such as the AKK, and the expansion of the Lagos-Escravos pipeline to Morocco and further to Europe.

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“There is a huge demand for gas in Nigeria, and the sector is large enough to accommodate everyone. The ministry of petroleum resources welcomes ideas and ventures that could assist us in bridging the gap between demand for gas and the low level of development of our enormous natural gas reserves,” he said.