NEITI: Nigeria’s Tax Reform Must Catalyse, Not Constrain Energy Sufficiency

Emmanuel Addeh in Abuja

Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday advised that the framework adopted for the proposed tax laws should accelerate the growth of the energy sector, rather than constrain it.

In his opening remarks at the second edition of “Rembinar Series on Tax Bills and Their Implications on Energy Transition,” organised in collaboration with OrderPaper, Executive Secretary of NEITI, Dr Orji Ogbonnaya, stated that the success of Nigeria’s Energy Transition Plan will significantly depend on the design and effective implementation of its tax policies.

The Rembinar Dialogue Series, convened by OrderPaper’s Oke Epia, was conceived as a platform to foster meaningful engagement on issues of resource governance, fiscal transparency, and accountability in Nigeria’s extractive sector.

As Nigeria charts its path from a fossil fuel-dependent economy towards renewable energy, Ogbonnaya argued that tax policy will play a central role in shaping the success of the energy transition agenda and, by extension, its sustainable development ambitions.

He said, “Together, let us work to ensure that Nigeria’s tax framework becomes a catalyst, not a constraint, in our journey towards a clean, secure, and inclusive energy future.”

According to him, at present, critical measures are missing from Nigeria’s fiscal proposals — including Value Added Tax (VAT) exemptions on renewable energy components, tax credits for clean energy investments, and accelerated depreciation allowances for green technologies.

The NEITI’s executive secretary stated, “There are globally proven tools that Nigeria must urgently institutionalise. While Nigeria’s Green Bond Programme is a commendable start, it requires stronger fiscal support. Imagine if investors in certified green bonds received tax breaks or reduced withholding tax rates, it would unlock a floodgate of climate-aligned investments.

“Equally important is the establishment of a national carbon pricing mechanism. Embedding the environmental costs of emissions within our fiscal framework will not only raise much-needed revenue but also incentivise cleaner industrial practices, aligning tax policy with our 2060 Net-Zero ambition.

“To achieve this, Nigeria must: introduce targeted incentives for renewables, energy efficiency, and energy storage technologies; develop a comprehensive Green Fiscal Framework anchored in transparency and accountability, and reallocate fossil fuel subsidies to support off-grid renewable energy solutions.”

Founder and Chief Executive of OrderPaper Nigeria, Epia, said the online event was convened to foster topical discussions on broad resource governance issues that aimed to advance fiscal reforms, transparency and accountability within Nigeria’s extractive sector and the unfolding energy transition.

He said the programme was designed to attract participation from a wide range of stakeholders, with mandates and interest in fiscal governance, extractive transparency and public finance management.

The inaugural edition was held on March 3.

Expressing hope that the bills will revolutionise the country and redirect not just investment, but also production and even consumption, Epia explained that when they became laws, they will have clear intersection with Nigeria’s energy sector, including the energy transition.

He stated, “These are the goals we want to achieve. And the tax reforms must have a way to align these ambitions. The changes we want to see in the fiscal framework must be aligned, otherwise, we will have to suffer not just policy inconsistency but policy misalignment.”

Deputy Chairman, House of Representatives Committee on Environment, Hon. Teseer Ugbor, stated that the whole concept of the tax reforms was to change the way tax administration was done, to enhance revenue mobilisation, job creation, and economic development.

Ugbor said, “The reforms generally seek a unified tax administration system across Nigeria. However, there must be a transition period where states and local governments and the federal government move collectively and gradually to the new tax system.”

Director-General of National Council on Climate Change Secretariat (NCCCS), Dr Nkiruka Maduekwe, stated that one of the things that should be considered under fiscal regulation was the mechanism for carbon tax in Nigeria.