By Ese Ufuoma
Nigeria’s energy sector is set for a major overhaul, with the government implementing bold reforms aimed at unlocking billions of dollars in investment, boosting economic growth, and securing energy stability for the country.
Speaking at the African Energy Week, the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, emphasized that the country’s energy sector has immense untapped potential and that the reforms underway will lay the foundation for long-term growth. “Nigeria is at a turning point in its energy sector,”Olu Verheijen said. “Our focus is to create a more transparent, investor-friendly environment by addressing the systemic challenges of underinvestment, outdated regulations, and security concerns.”
Despite having some of the world’s largest oil and gas reserves, Nigeria has long underperformed in energy production. While Brazil, with just 30% of Nigeria’s reserves, produces 130% more oil, Nigeria’s natural gas sector contributes only 1% to the national GDP, with 75% of its reserves still untapped. These issues have been primarily caused by years of underinvestment and inefficiencies in both regulatory frameworks and security management.
The President Bola Tinubu administration is determined to change this. Since 2016, Nigeria has attracted only 4% of total energy investments in Africa, leaving a significant gap compared to other African nations with fewer resources. To address this, the government is rolling out a series of bold fiscal and regulatory reforms. The most notable of these is the removal of petroleum subsidies, which has helped liberalize the downstream oil sector and foreign exchange markets. According to Olu Verheijen, “The removal of subsidies is a necessary step towards creating a sustainable, market-driven energy sector, and it has already started to stabilize public finances while improving the overall investment climate.”
In addition to subsidy removal, the administration has introduced a range of fiscal incentives aimed at boosting investment in Nigeria’s oil, gas, and energy sectors. These include measures to incentivize deep offshore oil exploration, natural gas production, and infrastructure development in areas such as compressed natural gas (CNG), liquefied petroleum gas (LPG), and mini-LNG. “For the first time, we are outlining a clear fiscal framework for deepwater gas exploration, which will stimulate long-term growth in the sector and position Nigeria as a leader in Africa’s energy transition,” Olu Verheijen added.
Central to these reforms is the Gas for Growth initiative, which seeks to reduce Nigeria’s reliance on petrol and diesel in key sectors such as heavy transport, decentralized power generation, and cooking. The initiative aims to drive demand for cleaner energy alternatives like gas and expand the infrastructure needed to support the transition. This move aligns with global trends toward cleaner energy and offers a new growth avenue for Nigeria’s underutilized natural gas resources.
Security remains a significant challenge in Nigeria’s energy sector, particularly in oil-producing regions. To address this, the National Security Advisor, in collaboration with the Ministry of Energy, is introducing targeted security directives to streamline approval processes and reduce the operational risks associated with energy projects. “Our approach is data-driven,” said Olu Verheijen. “By leveraging real-time information from industry operators, we will ensure that energy projects are completed faster, at lower costs, and with enhanced security.”
The reforms are already beginning to show results. Over $1 billion in new investments have been secured across the energy value chain in just the past 12 months. By mid-2025, Nigeria expects to finalize investment decisions on several key projects, including a multi-billion-dollar deepwater oil development, the first such project in over a decade.
