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EXPLAINER: What Tinubu’s new deep offshore tax incentives mean for Nigeria

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President Bola Tinubu announced on Tuesday that he approved the Deep Offshore Oil and Gas Tax Credit Order, 2026—a new fiscal incentive designed to attract large-scale investments into Nigeria’s deep offshore oil and gas sector.

The Nigerian leader hinted that the policy is aimed at making previously stalled offshore projects commercially viable by offering investors tax incentives and greater certainty over the fiscal terms governing their investments.

“I have signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, creating a clear and predictable framework capable of unlocking up to $50 billion in deep offshore investment, beginning with the approximately $10 billion Bonga South West project,” the president wrote.

He explained that for too long, some of Nigeria’s biggest offshore opportunities have remained stalled, and that “We cannot afford to leave that opportunity beneath our waters for another decade.”

The president explained that as capital moves, countries compete for the resources, and investors committing billions of dollars over many years need certainty.

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“We are providing that certainty, with a clear window for existing deep offshore leases to reach Final Investment Decision by 31 December 2029 and qualify for the full standard incentive,” he said.

The order marks the tenth major policy directive of the Tinubu-led administration targeted specifically at the oil and gas sector. It clearly demonstrates the deliberate efforts being made by the government to remove constraints holding back investment, production and value creation in the country’s oil and gas industry.

But beyond attracting capital, the federal government says it wants the new investments to generate jobs, strengthen Nigerian businesses and build local technical capacity.

“Our natural resources must work harder for our people. Nigeria First,” the president wrote on his official Facebook page on Wednesday.

Why did the government introduce the new incentive?

The deep offshore framework announced on Tuesday came seven months after Shell Plc signalled moves to renew and expand investment push in Nigeria, citing improved political stability, policy consistency, and leadership as key factors driving its confidence in the country’s energy sector.

During a courtesy visit to President Tinubu early this year, the Chief Executive Officer of Shell Plc, Wael Sawan, disclosed the company’s investment plans and explained that Nigeria now stands out as one of the most attractive destinations for capital allocation within Shell’s global portfolio.

“We think there is more to invest here, and we understand the vision that you (President Bola Tinubu) have for the country, and so we are indeed working on a project, Bonga Southwest, that could potentially, if we get to an FID stage, see us, with the partners, invest around $20 billion in foreign direct investment,” Mr Sawan said at the time.

The policy was also announced less than a month after 31 companies emerged winners of 37 oil and gas blocks in Nigeria’s 2025 Licensing Round following the conclusion of the commercial bid conference held in Abuja last month.

Nigeria has significant oil and gas resources located in deep offshore fields, but several large projects have remained undeveloped for years. Similarly, oil and gas exploration activities across Nigeria’s major oil fields have generated significant environmental and economic impacts over the past decades. Shell’s activities across the Niger Delta have resulted in a plethora of environmental issues including several lawsuits. Pipeline vandalism, insecurity and vague regulations/policies have also prevented investors from investing in Nigeria’s deep and shallow reserves at a larger scale.

On Tuesday, the government says high development costs, complex project economics and uncertainty over fiscal terms have discouraged investors from committing the billions of dollars required to develop these fields.

Deep offshore projects are particularly capital-intensive because they require specialised vessels, drilling equipment, subsea infrastructure and advanced technology.

At the same time, oil companies have several investment options around the world and generally commit capital to projects where the fiscal and regulatory environment provides sufficient certainty over the long term.

The new framework is therefore intended to make Nigeria’s deep offshore projects more competitive and give investors clearer terms for making long-term investment decisions.

How much investment is Nigeria targeting and what is the tax incentive?

The federal government estimates that the new framework could unlock up to $50 billion in fresh deep offshore investments.

One of the major projects expected to benefit is the Bonga Southwest-Aparo development, which has an estimated investment requirement of about $10 billion.

The government expects the policy to help move such projects from prolonged delays to final investment decisions, construction and eventual production.

Projects that commence investment within the qualifying period, up to 31 December 2029, are expected to benefit from the incentives provided under the framework.

A review of the 13-page order document by the government indicated that the Nigerian government is offering investors a more favourable and clearer tax treatment to improve the economics of qualifying deep offshore projects.

The idea is to reduce the tax burden associated with developing these capital-intensive fields, thereby improving their expected returns and making them more attractive to investors.

For companies considering whether to commit billions of dollars to a project that could take years to develop and operate for decades, the certainty provided by a clearly defined fiscal framework can be as important as the size of the incentive itself.

The newly signed order has provided a distinctive framework for the government and prospective/eligible investors to operate in an atmosphere that is fair and beneficial to both parties.

What does Nigeria get in return?

The government says the policy is not simply about attracting foreign capital.

President Tinubu has emphasised that the new investments should also translate into tangible benefits for Nigerians.

The approved projects are expected to create employment for indigenous engineers, welders, technicians, marine workers and other professionals. Likewise, it is projected that local companies could benefit from opportunities in fabrication, marine services, logistics, engineering and other areas of the offshore supply chain.

Additionally, the Nigerian government wants more fabrication, equipment supply, technical services and training to take place locally rather than being outsourced entirely overseas.The projects are expected to provide opportunities for Nigerian workers to acquire specialised skills needed in the offshore oil and gas industry.

Authorities envisaged that increased demand from major offshore projects could help Nigerian businesses expand their capacity and participate in more sophisticated areas of the energy value chain.

Will the government policy translate into real impact for Nigerians?

One of the fundamental questions surrounding the government’s recent policy is: How will the government policy benefit an average Nigerian? Similarly, will the government lose money by granting tax incentives to IOCs?

Tax incentives mean the government may forgo some tax revenue that it would otherwise have collected from qualifying projects. The government’s argument is that without the incentives, some of these projects may not be developed at all.

It is believed that if the incentives succeed in attracting new investment, the government could eventually benefit through increased oil production, royalties, taxes from other parts of the economy, employment and wider economic activity.

The ultimate test, therefore, will be whether the economic benefits generated by the new investments outweigh the revenue forgone through the incentives.

Also, will the dividends of the investment reach grassroot communities? This is especially because decades of oil exploration in Nigeria’s oil-rich communities have robbed them of their livelihood due to persistent pollution from oil and gas fields.

What should Nigerians watch out for?

For many Nigerians, the success of the new policy may not be judged solely by the amount of investment announced but by the direct impact on Nigerians.

Key indicators will include, how environmentally friendly or sustainable are the activities of the approved project, how much of the projected $50 billion is actually committed, how many stalled projects move to Final Investment Decision, how much additional crude oil and gas the projects eventually produce, and how many Nigerian workers are employed.

Other critical concerns are how much project expenditure goes to Nigerian companies, how much equipment and infrastructure is produced or assembled in Nigeria. And whether Nigerian workers and companies are able to acquire capabilities that remain after the projects are completed.

READ ALSO: High taxation, insecurity, high interest rates top constraints facing Nigerian businesses – Survey

These concerns are critical, especially because groups of environmentalists across Nigeria are already criticizing the government move to resume exploration in the Niger Delta.

This is because the devastation caused by oil companies across the region has caused unprecedented levels of hardship, suffering and bitter memories for many families and communities. Remediation efforts and compensation oftentimes do not complement the damages caused.

Prospects

The new deep offshore incentive framework is essentially an attempt to solve two problems at once.

Nigeria’s bold move to unlock billions of dollars in investment that has remained on the sidelines because of the difficult economics and uncertainty surrounding some deep offshore developments has attracted global attention.

While the government wants to ensure that the resulting investments generate broader economic benefits for Nigerians, rather than simply increasing crude oil exports, a deliberate effort to scale up environmental protection regulations would boost confidence in Nigeria’s ambitious climate change targets as enshrined in its third series of Nationally Determined Contribution (NDC-3.0) submitted to the United Nations Framework Convention on Climate Change.

Nonetheless, if the new deep offshore policy delivers as intended, Nigeria could see new offshore projects, increased oil production, more employment, stronger local businesses and greater technical capacity.

But the real measure of success will be what happens after the announcements: how much money is actually invested, how many projects are developed, how much oil is produced, how sustainable are the projects and how much of the resulting economic value remains in Nigeria.


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Afrinvest CEO recalls how Elumelu’s $1 million loan helped salvage firm from crisis

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Tony Elumelu played a supreme role in getting investment bank Afrinvest back on track in 2011 after the global financial meltdown pushed the investment bank to the brink, its chief executive recalled in a letter to the tycoon seen by PREMIUM TIMES.

The multisectoral magnate, who is the top shareholder of United Bank for Africa, the Transcorp Group, and Seplat Energy, granted a soft loan of $1 million to Ike Chioke, the CEO of the financial institution, as a mark of urgent support when the firm direly needed the cash to recapitalise, the latter said.

“Fifteen years ago, Afrinvest was navigating one of the most challenging periods in its history, as we struggled to rebuild and recapitalise the business in the aftermath of the global financial crisis,” Mr Chioke said.

“At that critical juncture, when the future was far from certain, you made the remarkable decision to lend me US$1 million of your personal funds. You placed your confidence not simply in the prospects of a business but in me as an individual, my integrity, my determination and my conviction that Afrinvest could emerge stronger from adversity.”

This June, Mr Chioke eventually completed the repayment of the credit, according to the letter, describing the gesture as an extraordinary act of friendship, generosity and trust.

READ ALSO: Afrinvest repays undocumented $1 million from Elumelu with interest

Mr Elumelu, whose economic vision is anchored on what he calls “Africapitalism” – an investment philosophy that prioritises the private sector’s role in democratising the wealth Africa needs to power large-scale growth, has been involved in active philanthropic initiatives on the continent.

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In March, his foremost charity project, the Tony Elumelu Foundation, turned sixteen, and he said the initiative had disbursed over $100 million in seed capital to 24,000 entrepreneurs in Africa and created more than 1.5 million jobs over the period.

The foundation expects to fund an additional 3,200 entrepreneurs this year, it said in September.

Mr Chioke applauded the profound impact Mr Elumelu’s financial assistance has had on Afrinvest, notably transforming it into a diversified regional financial services group with an expanding universe of clients and operations in asset management, investment banking, research & consulting, and securities trading.


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FG Backs Risk-Based Capital, Urges Insurance Directors to Move Beyond Passive Compliance

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BY NKECHI NAECHE-ESEZOBOR—The Federal Government has thrown its weight behind risk-based capital in the insurance industry and urged insurance company boards to move from passive regulatory compliance to active oversight.

The government made its position known through the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, at the 2026 Insurance Directors’ Conference, themed “Recapitalisation to Resilience: Leading the Risk-Based Capital Era.” The conference was organised by the College of Insurance and Financial Management (CIFM).

The minister, who was represented by Dr. Greg Ugochukwu Ezeilo, Special Adviser on Fiscal Risk Management and Sustainability, said a resilient insurance industry is indispensable to the country’s economic transformation.

He described insurance as more than a mechanism for compensating losses, calling it an instrument for mobilising long-term capital, enabling productive investment and protecting livelihoods. He said the economy needs an insurance sector able to underwrite emerging risks, support infrastructure financing and strengthen agricultural productivity.

On the transition to risk-based capital, he said insurers must align their capital with the nature, scale and complexity of the risks they take on. He also called for a more forward-looking approach to governance, investment decisions, underwriting practices and enterprise risk management.

“Capital without governance is vulnerable,” he said. He added that governance without accountability is ineffective, and that insurance without public confidence cannot fulfil its economic value.

According to him, the transition places heightened responsibility on insurance company boards. He said directors must move beyond passive regulatory compliance to active oversight and ensure that risk appetite, capital allocation, corporate strategy and institutional capacity are consistently aligned.

He set out five priorities for the industry. The first is strong governance, with visible leadership at the top, independent oversight and transparency, noting that public confidence remains the industry’s most valuable capital. The second is wider access, with affordable, accessible and relevant products for households, small businesses, farmers and underserved communities, so that insurance becomes an everyday instrument of economic security rather than a privilege of a limited market segment.

The third is directing the industry’s long-term funds, under prudent investment frameworks, towards productive investment, infrastructure financing and sustainable economic growth. The fourth is technology and innovation, including big data analytics, machine learning, artificial intelligence and innovative underwriting models, supported by robust cyber security, consumer protection and operational safeguards. The fifth is building capacity to handle emerging risks such as climate-related disruptions, cyber threats, changing demographics and increasingly interconnected financial markets.

He said the Federal Government remains committed to a stable, competitive and inclusive financial ecosystem in which insurance contributes meaningfully to national economic development. He recognised the National Insurance Commission’s role in strengthening regulatory standards, protecting policyholders and guiding the industry through the transition.

He said sustainable reform requires collaboration among regulators, operators, investors and government, and urged stakeholders to see the transition not simply as a regulatory exercise but as an opportunity for strategic transformation.

The ultimate measure of success, he said, is how effectively the industry helps Nigerians absorb shocks, builds confidence and finds progress.

The post FG Backs Risk-Based Capital, Urges Insurance Directors to Move Beyond Passive Compliance appeared first on Business Today NG.

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