FG to Generate ₦796bn Annually from 5% Fuel Surcharge Despite Public Outcry
The Federal Government of Nigeria is set to implement a five per cent surcharge on all refined fossil fuel products, including petrol and diesel, effective January 1, 2026. This move, part of a broader fiscal reform under the Nigeria Tax Administration Act signed into law by President Bola Tinubu in June 2025, is projected to yield approximately ₦796bn annually from petrol alone. The surcharge aims to enhance non-oil revenue and reduce fiscal dependence on crude oil amid mounting national debt and past subsidy burdens.
The revenue estimate is based on the 18.75 billion litres of petrol consumed nationwide in 2024, at an average retail price of ₦850 per litre, totaling ₦15.93tn in market value. The five per cent surcharge on this sum results in the ₦796bn figure. The government also expects higher returns when other fossil fuels such as diesel and aviation fuel are included. While clean energy products and household fuels like kerosene, LPG, and CNG are exempt, the surcharge applies broadly to petrol-related sales and transactions, raising concerns about its wider economic impact.
The new surcharge has triggered widespread criticism from consumer groups, transport unions, and human rights organizations. Many argue it’s unfair to impose additional costs on Nigerians already grappling with high fuel prices after the removal of petrol subsidies. Akintade Abiodun of the Joint Drivers Welfare Association accused the government of treating citizens like “lab rats” for experimental economic policies, while social justice advocates warned of rising public frustration and potential unrest if such measures persist without relief mechanisms.
Oil marketers and refinery groups have voiced conditional support but warn of unintended consequences. The Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Association of Nigerian Refineries Petroleum Marketers stressed that the levy would inevitably increase fuel pump prices. IPMAN’s spokesperson noted that the surcharge would be embedded in the pre-pricing phase, thereby transferring the cost to end users. Stakeholders called for transparent implementation, regulatory oversight, and improved infrastructure to justify the tax.
Although the law has been passed, the effective implementation date is pending the Minister of Finance’s approval. The Federal Inland Revenue Service (soon to be rebranded as the Nigeria Revenue Service) will be responsible for monthly collection and oversight. As the Tinubu administration rolls out comprehensive tax reforms to stabilize Nigeria’s finances, this surcharge remains one of the most contentious, as it pits revenue generation goals against economic hardship and public perception of fairness.
Source: Punch