Power Sector Watch - Special Edition (Volume 4)

Nigeria’s power sector has continued to grow even though some may argue that the rate of growth is still below the required level. The commercial framework for the sector has however remained an issue. The power sector is highly capital intensive as large amounts of investment are required for acquisition and installation of equipment and machinery, construction of power plants and transmission lines, as well as regular maintenance and upgrades of the equipment and machines to ensure that they meet increasing demands. Therefore, players in the sector continue to advocate for more incentives which they believe may impact the commercial framework and aid growth. Notwithstanding, there are already some incentives available to players in the sector and this newsletter seeks to introduce a few of them for consideration.

1. VAT exemptions on goods and importation of equipment

The Federal Government of Nigeria published the Value Added Tax (Modification Order) in its Official Gazette No. 167, Vol.108 of 21 September 2021 (‘the Order). The 2021 Order, which had a commencement date of 30 July 2022, was issued by the Honourable Minister of Finance, Budget and National Planning (HMoFBNP), Mrs. Zainab Shamsuna Ahmed, pursuant to her powers under Section 38 of the Value Added Tax (VAT) Act, Cap.

V1, Laws of the Federation of Nigeria, 2004 (as amended).

The Order introduced exemption for various products and goods relating to the power sector. These include:

•  Gas supplied by gas producing companies to electricity generating companies (GENCOs),