Tax act could boost power sector growth : expert

Dr Olukayode Akinrolabu says the progressive provisions of the Nigeria Tax Act 2025, with effective monitoring, could significantly strengthen Nigeria’s power sector and economic growth.

He made the remarks in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos, following the Act’s official takeoff on Jan. 1.

The Act, signed into law in June 2025, is regarded as one of the most comprehensive fiscal reforms in Nigeria’s petroleum and energy sectors in decades.

Akinrolabu said the new tax regime would have far-reaching implications for the power sector if properly implemented.

He called for a priority sector programme to replace the existing pioneer status incentive, stressing that targeted tax benefits could stimulate critical investments.

According to him, incentives should cover renewable energy and power infrastructure across the value chain to enhance efficiency and ensure more reliable electricity supply.
He also advocated zero-rated Value Added Tax on renewable energy equipment to encourage investments in solar and wind power.

“This would promote diversification and expand Nigeria’s energy market with wider consumer choices,” Akinrolabu said.

He warned that the proposed five per cent surcharge on fossil fuels could raise costs for gas-based power generation companies.

“This may affect investment decisions and push stakeholders towards alternative energy sources with lower tax-based operating costs,” he said.

Akinrolabu noted that higher operating costs could lead to tariff increases unless mitigating measures, such as consensus rebates, are adopted.

However, he said incentives for renewable energy could diversify supply and help stabilise electricity tariffs over the long term.

“The new tax regime could improve sector sustainability and economic growth.

“Increased tax revenue could be reinvested in infrastructure, while renewable incentives could create jobs for youths with modern energy skills,” Akinrolabu said.