Tinubu signs new executive order in energy sector, caps tax credits at 20%

President Bola Tinubu has issued a new executive order (EO) to lower project costs, attract investment, and enhance revenues from oil and gas operations.

In a statement on Thursday, the office of the special adviser to the president on energy said the order, tagged the ‘Upstream Petroleum Operations Cost Efficiency Incentives Order (2025)’, also caps tax credits to firms at 20 percent.

As a form of government incentive, a tax credit is the amount of money a company can subtract from the income tax it owes to the state.

According to the statement, the EO introduces performance-based tax incentives for upstream operators who deliver “verifiable cost savings” aligned with defined industry benchmarks.

“The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will publish these benchmarks annually according to terrain onshore, shallow water, and deep offshore,” the statement reads.

“Additionally, detailed implementation guidelines for the new Order will be issued in due course. Among other provisions, the Order also caps available tax credits at 20% of a company’s annual tax liability—protecting government revenues while still offering strong fiscal terms to incentivize efficient operators.”

Speaking on the new order, President Bola Tinubu said Nigeria must attract investment inflows — “not out of charity” — but because “investors are convinced of real and enduring value”.

“This Order is a signal to the world: we are building an oil and gas sector that is efficient, competitive, and works for all Nigerians. It is about securing our future, creating jobs, and making every barrel count,” he said.

To ensure effective implementation of the new order, the president asked Olu Verheijen, his special adviser on energy, to spearhead inter-agency coordination, ensure alignment across key government institutions and translate policy objectives into measurable outcomes.

On her part, Verheijen said the order is not a pursuit of cost reduction for its own sake.

“It is a deliberate strategy to position Nigeria’s upstream sector as globally competitive and fiscally resilient,” she said.

“With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people.”

According to the statement, the new order builds on the administration’s 2024 presidential reform directives, which introduced enhanced fiscal terms, streamlined project timelines, and aligned local content policies with global best practices.