PRESIDENT TINUBU SIGNS LANDMARK COST EFFICIENCY ORDER TO LOWER UPSTREAM PETROLEUM COSTS AND REWARD RESPONSIBLE OPERATORS

President Bola Ahmed Tinubu has signed the Upstream Petroleum Operations (Cost Efficiency Incentives) Order, 2025, aimed at reducing the high operating costs in Nigeria’s oil and gas sector, aligning with global best practices, and improving investor confidence.

The policy introduces a Cost Efficiency Incentive (CEI) framework that offers tax credits to oil and gas operators who meet or exceed cost-reduction targets. 

Key highlights of the Order include:

•Annual benchmarks and cost targets set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for onshore, shallow water, and deep offshore terrains.

•Operators that operate below the benchmarked Unit Operating Cost (UOC) will be eligible for tax credits worth up to 50% of savings, capped at 20% of total tax liability.

•The incentive window runs until May 31, 2035 and rewards efficiency without compromising government revenue.

•A strict evaluation framework ensures that only fair, ethical cost-saving practices are rewarded.

•The initiative also encourages fiscal discipline, shortens contracting cycles, and increases Nigeria’s competitiveness in the global energy market.

•Implementation guidelines will be released within 30 days and all qualifying companies will be published annually.

This move reinforces President Tinubu’s commitment to economic reform, transparency, and efficient resource management under the Renewed Hope Agenda.

Kamorudeen Yusuf

Personal Assistant on Special Duties to the President Federal Republic of Nigeria