Because Tinubu signed the executive order on mountain oil operations

President Bola Tinubu has signed the order of “Operating Operations upstream (incentives for cost efficiency), 2025”, to put an end to the high operating costs in the oil and Nigerian gas sector, compared to the global average.

This is contained in a document obtained by our correspondent from the special consultant office to the president for energy in Abuja.

According to the document, the high operating costs derive mainly from prolonged timing of the project execution and local content requirements.

“The President, in response to the high operating costs, has issued political directives on the reduction of the operating costs of the oil and gas sector, the contractual timing and requirements for compliance with local content

“The Federal Government of Nigeria is engaged in the efficient management of oil resources and the reduction of costs in petroleum operations upstream to improve competitiveness and efficiency.

“It has become necessary to provide further measures to promote tax discipline, reduce operating costs and maximize the economic gains of Nigeria with petroleum operations upstream.

“This will be done through monitoring

Appropriate mechanisms and regime of incentives “, the document stated in part.

The order was issued in the exercise of the powers awarded to the President by Section 5 (1) of the 1999 Constitution.

The order was also in line with the powers of the president in sections 23 (2) and 89 of the corporate income tax law, cap C21, laws of the Federation of Nigeria, 2004.

“The incentives established pursuant to this order cease to have an effect on May 31, 2035, if not extended or otherwise modified by the President.

“If a tax credit granted but not used by any lessee or licensee on the expiry date becomes not valid and inapplicable”,

In a declaration issued on Friday, by Ms Olu Verheijen, special consultant of the President for Energy, said that the order introduces tax -based tax incentives for mountain operators who offer savings on verifiable costs that satisfy the benchmarks in the defined sector.

The special consultant said that the order returns to investors 50 % of the gain of the incremental government deriving from saving on costs

He said the order also limits tax credits available to 20 % of the annual tax liability of a company, which protects government revenues while offering continuous tax terms to encourage efficient operators.

“This is not the search for the reduction of costs for your own good. It is a deliberate strategy to position the sector upstream of Nigeria as a competitive global and fiscally resistant level.

“With this reform, we are gratifying the efficiency, strengthening the trust of investors and, ultimately, offers greater value to the Nigerian people.

“The new order is based on the directives on the presidential reform of 2024 of the administration that have provided improved tax conditions, embraced times of the project and aligned local content policies with the best global practices,” he said.

Verheijen said that President Haf has commissioned his office to guide the order coordination of the order to guarantee effective implementation and translation into measurable results.