Nigeria Extractive Industries Transparency Initiative (NEITI) has warned that the country may lose up to N6 trillion yearly to unaccounted tax incentives and waivers granted to operators in the fossil fuel sector.

Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji, disclosed this in Abuja during the launch of a new report on assessing the role of tax incentives in Nigeria’s Fossil Industry by the Civil Society Legislative Advocacy Centre (CISLAC).

According to him, the lack of transparency and weak oversight in the management of tax incentives has continued to drain government revenue at a time when Nigeria is struggling to finance its energy transition and fiscal needs.

Orji said NEITI’s ongoing national study on the Impact of Energy Transition on Nigeria’s Oil-Dependent Economy shows that the country “faces a delicate balance” between sustaining oil revenues and preparing for a post-fossil fuel future.

Without a well-managed fiscal transition, Nigeria risks facing a dual challenge, including declining hydrocarbon revenues and insufficient investment in cleaner energy alternatives, he warned, noting that many of the tax incentives offered to companies in the oil and gas sector no longer align with national development priorities and should be urgently reviewed or removed.

“Our policy brief on Nigeria’s new tax and revenue framework reveals that lack of transparency and strong multi-stakeholder oversight in administering these incentives could lead to losses of nearly N6 trillion yearly,” he said.

Stressing that transparency must guide Nigeria’s energy transition, Orji argued that all subsidies, exemptions and incentives should be publicly disclosed and justified in line with long-term fiscal and sustainability goals.

He urged that fiscal reforms must be coherent, inclusive and gender-sensitive, ensuring that workers and communities dependent on extractive activities were not left behind.

The NEITI boss commended CISLAC for initiating the study and pledged to collaborate on implementing its recommendations, especially those focused on fiscal transparency, climate accountability and data-driven oversight.

CISLAC Executive Director, Auwal Musa Rafsanjani, remarked that Nigeria’s fiscal policy contradicts its commitment to achieving net-zero carbon emissions by 2060.

He noted that while the government continues to provide incentives for fossil fuel investments, it also claims to be pursuing an ambitious energy transition agenda.

“Incentivising the fossil fuel industry on one hand and pursuing a net-zero emission target on the other exposes a policy contradiction,” Rafsanjani said.

Rafsanjani observed that although incentives were often used globally to attract investment, Nigeria’s approach perpetuated dependence on fossil fuels instead of encouraging renewable energy growth.

The new report, he asserted, calls for a recalibration of fiscal policy to phase out fossil fuel incentives, improve domestic resource mobilisation and strengthen institutions for tax expenditure reporting and accountability.

He also stressed the need for international cooperation and climate financing support to help fossil fuel-dependent economies like Nigeria transition smoothly to cleaner energy sources.