In a move to bolster its energy sector, Nigeria has introduced new tax incentives aimed at attracting up to $10 billion in natural gas investments, specifically targeting deepwater gas exploration. Approved by Nigeria’s Federal Executive Council and currently being reviewed by the National Assembly, the policy framework offers substantial tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits. The incentives include reductions on gas-related revenues and enhanced deductibility of costs, making it more financially viable for foreign investors to enter the Nigerian gas market.
The initiative comes at a critical time as Nigeria seeks to leverage its offshore gas reserves – of which two-thirds remain undeveloped – to spur economic growth and bridge the energy deficit in the region. With a focus on creating a more enabling environment for investment, the incentives aim to address long-standing concerns about regulatory complexity and high costs in Nigeria’s energy sector. Taking place in Paris next May, the Invest in African Energy (IAE) Forum will shine a spotlight on current tax and fiscal measures being enacted across the continent and their role in advancing Africa’s energy ambitions and creating new pathways for partnership and investment.
Nigeria’s move is part of a broader trend across Africa, where several countries have begun to recognize the power of attractive fiscal policies in attracting and securing foreign capital. Mozambique offers several incentives for oil and gas investments, including reduced corporate tax rates, customs duties exemptions and VAT reductions for equipment and services related to petroleum operations. These measures have enhanced Mozambique’s competitiveness as it continues to develop its vast offshore gas reserves. Similarly, Ghana offers a flexible tax regime under its Petroleum Income Tax Act, and recent reforms have also provided capital allowances and exemptions on imported equipment used in upstream activities, as the country aims to maintain its position as an attractive destination for oil and gas investment.
Tax incentives have also proven highly effective in catalyzing clean energy investments in a number of African markets. Angola has implemented significant tax cuts and customs exemptions for renewable energy investors, while Egypt has rolled out a series of benefits for investors in solar and wind energy as part of its energy diversification strategy. These include tax exemptions on income generated from renewable energy projects, reduced customs duties on imported renewable energy equipment and favorable land leasing terms. South Africa has introduced tax incentives under its Income Tax Act, which allows companies to claim tax deductions for energy efficiency improvements. Additionally, the South African government provides accelerated depreciation benefits for renewable energy assets, allowing companies to write off a significant portion of their capital expenditure within the first few years of operation.
In short, tax incentives play a critical role in fostering an enabling environment for foreign investors. In emerging markets where infrastructure and regulatory challenges can deter investment, fiscal incentives can offset perceived risks and make large-scale energy projects financially viable. By reducing upfront costs, offering tax holidays or providing capital allowances, governments can lower the barrier to entry for foreign investors while simultaneously fostering local job creation, technology transfer and long-term economic growth. Moreover, incentives are not limited to tax breaks; African governments are increasingly offering infrastructure support, regulatory reform and access to financing to ensure foreign investors have the tools they need to thrive.
IAE 2025 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place May 13-14, 2025 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers. For more information, please visit www.invest-africa-energy.com. To sponsor or participate as a delegate, please contact sales@energycapitalpower.com.