Reasons Behind Tinubu’s Executive Orders on Oil and Gas, Explained by Aide

The Special Adviser to the President on Energy, Mrs. Olu Verheijen, has highlighted the reasons behind President Bola Ahmed Tinubu’s decision to sign Executive Orders aimed at transforming Nigeria’s gas and energy sectors. Mrs. Verheijen emphasized that gas holds immense potential for Nigeria’s energy stability and is crucial for economic growth and diversification.

In a media briefing in Abuja, Mrs. Verheijen explained that President Tinubu’s actions were driven by the urgent need to make gas more accessible and affordable for Nigerians, reducing reliance on petrol and diesel. She underscored the importance of clear and consistent policies to accelerate economic growth and tackle the ongoing revenue crisis affecting the country.

Nigeria currently holds 38% of Africa’s hydrocarbon reserves but only accounts for 4% of the continent’s oil and gas investments since 2016. Mrs. Verheijen stressed that Nigeria’s wealth is not just in its resources but in how effectively these resources are utilized. President Tinubu is committed to reversing this trend, creating a favorable business environment, and positioning Nigeria as an attractive investment destination in the oil and gas sector.

To address challenges in the sector, President Tinubu directed the streamlining and clarification of regulatory roles in the petroleum sector, resulting in tangible improvements. For instance, the TNP pipeline, previously vulnerable to vandalism, has seen increased uptime and doubled availability, leading to a significant increase in liquid transportation.

Additionally, fiscal incentives have been introduced to promote the use of Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG), aiming to reduce fuel subsidies’ impact on transportation costs. These incentives also support the transition to clean cooking methods, contributing to market stability and economic growth.

Regarding gas reserves, 76% remain undeveloped despite Nigeria’s substantial reserves. The introduced fiscal incentives are designed to attract investments, enhance energy security, stimulate economic activity, and create job opportunities.

President Tinubu has also issued directives to streamline contracting timelines, aiming to reduce the current 36-month cycle to less than 6 months, in line with global standards. This move will facilitate quicker delivery of oil and gas products to the market, enhancing overall value for the country.

Furthermore, a focus on local content practice reform aims to ensure that local content requirements do not hinder investments or project cost competitiveness. This reform seeks to reduce the current 40% operating cost premium in Nigeria’s oil and gas sector, potentially leading to significant benefits such as increased capacity for local companies, more business opportunities, job creation, and economic growth.

To ensure effective implementation of these policies, the tasks have been distributed among various government agencies, with oversight from Mrs. Verheijen’s office. The Minister of Finance/Coordinating Minister of the Economy will develop amendments for fiscal incentives legislation, while the Federal Inland Revenue Service (FIRS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will issue guidelines for implementing these incentives.