Tinubu Signs Executive Order Introducing Performance-Based Tax Incentives for Oil and Gas Sector

By Achimi muktar

In a sweeping move that could reset the rules of engagement in Nigeria’s petroleum sector, President Bola Ahmed Tinubu has signed a groundbreaking Executive Order introducing performance-based tax incentives aimed at unlocking billions in investment and slashing project costs in the country’s most lucrative industry.

Announced on Thursday by Special Adviser on Energy, Olu Verheijen, the new directive — titled the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) — offers tax breaks for oil and gas operators who can prove they’re running efficient, cost-effective operations.

“We’re not begging for investment — we’re creating undeniable value,” President Tinubu declared.
“This is about securing our future, creating jobs, and making every barrel count.”

At its core, the Executive Order rewards oil companies that meet or exceed industry cost-efficiency benchmarks, which will be tailored by terrain (onshore, shallow water, deep offshore) and updated yearly by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Key highlights include:

Tax credits capped at 20% of a company’s annual tax liability — a sweetener for efficient operators, without draining public coffers.

Annual benchmarking to keep the incentives grounded in real-world cost savings and performance standards.

A commitment to inter-agency coordination, led by Verheijen, to make sure reforms aren’t just paper promises but practical, measurable outcomes.

“This isn’t about cutting costs for the sake of it,” Verheijen emphasized.
“It’s about attracting real capital, rewarding efficiency, and making Nigeria globally competitive.”

The Executive Order couldn’t come at a better time. According to President Tinubu, rig counts in Nigeria have jumped over 400% in 2025 compared to 2021, with more than $8 billion in new investments committed this year alone — a sharp rebound for a sector long plagued by delays, cost overruns, and investor hesitancy.

The president’s latest move builds on his 2024 reform agenda, which saw him issue three key Executive Orders that laid the groundwork for today’s big reveal:

Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024

Presidential Directive on Local Content Compliance Requirements, 2024

Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024

Nigeria’s oil and gas sector has long been burdened by high operational costs and regulatory bottlenecks. With global investors increasingly scrutinizing every dollar, Tinubu’s administration is sending a clear message: Nigeria is open for business — and serious about reform.

By linking tax relief to performance, this Executive Order signals a pivot from entitlement to earned incentives, a shift that analysts say could reshape how upstream operations are managed in Africa’s biggest oil producer.

With this bold policy shift, President Tinubu isn't just tweaking tax codes — he's rebranding Nigeria’s oil sector as leaner, smarter, and investor-ready.