New Tax Act to strengthen monitoring, boost power sector — expert
By Yunus Yusuf
An energy expert, Dr Olukayode Akinrolabu, has said that the progressive provisions of the Nigeria Tax Act (NTA) 2025, combined with effective monitoring mechanisms, could significantly boost Nigeria’s power sector and overall economic growth.
Akinrolabu made the remarks in an interview on Monday in Lagos, following the official commencement of the NTA 2025 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, who is also the Chairman of the Customer Consultative Forum for Festac and Satellite Town, said the new tax regime would have far-reaching implications for the power sector if properly implemented.
He stressed the need for the introduction of a priority sector programme to replace the existing pioneer status Incentive, noting that targeted tax benefits could stimulate investments in key areas.
According to him, tax incentives should be extended to priority sectors such as renewable energy and power infrastructure, particularly across the value chain, to enhance efficiency and ensure more reliable electricity supply.
He also advocated for zero-rated Value Added Tax (VAT) on renewable energy equipment, saying it would encourage investments in solar and wind energy, promote diversification, and expand Nigeria’s energy market with wider consumer choices.
Akinrolabu further noted that the proposed five per cent surcharge on fossil fuels could raise operational costs for gas-based power generation companies.
“This may affect investment decisions and encourage stakeholders to explore alternative energy sources with relatively lower tax-based operational costs,” he said.
He acknowledged that the tax reforms could have implications for electricity supply and tariffs.
He warned that higher operating costs for generation companies reliant on fossil fuels could lead to tariff increases unless mitigating measures, such as consensus rebates, are adopted.
However, he said tax incentives for renewable energy could enhance supply diversity and help stabilise electricity tariffs in the long term.
“The new tax regime could improve sector sustainability and economic growth,” Akinrolabu said.
“Increased tax revenue could be recycled into the power sector, particularly for infrastructure maintenance, while incentives for renewable energy and power infrastructure could create jobs for youths with skills relevant to modern energy operations.
“A more efficient and transparent tax framework could also attract investments and drive sustainable sectoral growth,” he added.
