FG Enforces 0.5% Levy on Fuel Wholesalers: What Nigeria’s Downstream Petroleum Sector Needs to Know

The Federal Government of Nigeria has moved to tighten regulatory control over the downstream petroleum sector by enforcing a 0.5% levy on the wholesale price of petroleum products and natural gas. The new mandate, outlined in the Midstream and Downstream Petroleum Operations Regulations, 2025, requires suppliers to collect the levy from wholesale customers. Compliance is now directly tied to licensing, making adherence critical for operators across the sector.

According to Section 47 of the Petroleum Industry Act (PIA), the funds collected from this levy will be deposited into the Authority Fund managed by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The fund is designed to support the development and regulation of Nigeria’s petroleum industry. Suppliers are now legally obligated to deduct the 0.5% levy from the wholesale price of imported or locally refined petroleum products and remit it to the Authority Fund.

The decision comes after months of debate between fuel traders and the NMDPRA over who should collect the levy. While the regulator insisted that suppliers act as the collectors, traders expressed concerns about additional administrative burdens. NMDPRA clarified that the levy is part of the wholesale price rather than a separate charge, emphasizing that it should be included in all purchase agreements, invoices, and receipts between suppliers and wholesale customers.

In addition to the Authority Fund, operators are required to pay another 0.5% of the wholesale price to the Midstream and Downstream Gas Infrastructure Fund. The regulator has set strict reporting timelines, requiring suppliers to submit monthly reports on volumes sold, prices, and customer details. Compliance is monitored closely, and receipts are issued to confirm payment of the levies, which must be retained and shared with wholesale customers.

NMDPRA has also warned of strict penalties for non-compliance. Suppliers who fail to remit the levies on time face a 10% monthly administrative penalty on the unpaid amount. The regulator may also suspend licenses or halt operations at facilities until outstanding levies and penalties are fully settled. The move reflects the government’s determination to enforce transparency and accountability in Nigeria’s fuel supply chain, ensuring that the new levy supports the nation’s petroleum infrastructure and regulatory framework.

source: punch