Abuja: Executive Director of CISLAC, Auwal Rafsanjani, has called for a review of tax incentives in Nigeria’s fossil fuel sector, citing contradictions with the nation’s energy transition goals. The call was made during the launch of a new report on the fossil fuel industry.
According to News Agency of Nigeria, the report titled ‘Assessing the Role of Tax Incentives in Nigeria’s Fossil Fuel Industry: Implications for Energy Transition, Policy Direction and the Path to a Sustainable Future’ highlights the need for fiscal policies to align with Nigeria’s commitment to achieving net-zero emissions by 2060. Rafsanjani emphasized that while tax incentives traditionally attract foreign investments, sustaining them in the fossil fuel sector undermines the country’s climate action agenda.
He noted that incentivizing the fossil fuel industry while pursuing a net-zero emission target presents a contradiction in government strategy. Rafsanjani praised Nigeria’s recent climate initiatives but warned that fiscal regimes should not entrench dependence on fossil fuels but instead promote renewable energy and sustainable growth.
NAN reports that the CISLAC report, developed with support from Tax Justice Network Africa and Energy Transition Fund, examined Nigeria’s legislative and fiscal frameworks for fossil fuels. It recommended a gradual phase-out of subsidies and incentives that sustain carbon-heavy industries, along with comprehensive fiscal reforms and increased investment in renewable energy.
Dr. Ogbonnaya Orji, Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), warned that poor oversight could cost the country nearly ?6 trillion. He called for greater fiscal transparency and accountability in managing tax incentives within the fossil fuel industry.
Orji acknowledged CISLAC’s contribution as an evidence-based intervention in the dialogue on energy transition and sustainable development. He disclosed that NEITI’s ongoing national study on ‘The Impact of Energy Transition on Nigeria’s Oil-Dependent Economy’ highlighted risks associated with unmanaged fiscal transition.
Orji also pointed out that many existing tax incentives in the fossil fuel sector no longer align with national priorities and should be reviewed or removed. Aligning tax incentives with energy transition goals, he argued, is both a fiscal reform imperative and a climate justice necessity.
Ms. Gloria Majiga of Tax Justice Network Africa (TJNA) expressed concerns over the loss of funds meant for Africa’s development due to unquantifiable incentives. She emphasized that reversing fiscal frameworks could mobilize resources for cleaner energy investments.
Associate Professor Sabiu Sani from the University of Abuja highlighted that tax incentives for multinationals have become unnecessary, as many fiscal incentives benefiting multinational oil companies no longer serve any purpose.