The Federal Government could earn as much as ₦796 billion annually from a new 5% surcharge on locally produced and imported petrol, according to projections tied to the newly signed Nigeria Tax Administration Act, one of four sweeping tax reforms signed into law by President Bola Tinubu on June 26, 2025.
The policy, scheduled to take effect from January 1, 2026, is intended to boost non-oil revenue and support fiscal sustainability in the face of Nigeria’s mounting debt profile. But the announcement has sparked a wave of public criticism from citizens, civil society groups, and oil marketers, who argue it may further burden Nigerians already grappling with the aftershocks of fuel subsidy removal.
₦796bn in Revenue—From Petrol Alone
According to an analysis based on 2024 data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigeria consumed 18.75 billion litres of petrol last year, at an average pump price of ₦850 per litre. That amounts to a total consumption value of about ₦15.93 trillion.
With the 5% surcharge applied to the retail value of petrol, government revenue could hit ₦796 billion annually from petrol alone—excluding diesel, aviation fuel, and other fossil-based fuels.
The tax will apply at the point of sale, supply, or payment, whichever comes first, and will be collected monthly by the Federal Inland Revenue Service (FIRS), which is to be renamed the Nigeria Revenue Service by 2026. However, the policy’s final implementation is pending approval from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
Exemptions and Scope
Not all fuel types will attract the surcharge. Exempted products include:
- Household kerosene
- Liquefied Petroleum Gas (LPG or cooking gas)
- Compressed Natural Gas (CNG)
- Renewable energy sources like solar, wind, and hydropower
The surcharge, however, will impact petrol, diesel, aviation fuel, and other fossil fuels derived from petroleum, coal, and natural gas.
Public Outcry: “Another Burden on Nigerians”
The reaction has been swift and severe. Critics argue that the surcharge amounts to a second layer of fuel tax, particularly after the controversial fuel subsidy removal in 2023.
The Joint Drivers Welfare Association of Nigeria (JDWAN) called the move "unfair and insensitive," while human rights advocate Jackson Omenazu described the surcharge as “anti-people” and warned of rising public anger over the growing cost of living.
“How can lawmakers increase their own allowances and then ask the poor to pay more for fuel? This will only deepen poverty,” Omenazu said.
Marketers Sound Alarm on Price Hikes
Oil marketers have also warned of a potential rise in fuel pump prices, should the surcharge take effect. The Independent Petroleum Marketers Association of Nigeria (IPMAN) stressed that producers and refiners would pass the added cost to final consumers.
“Marketers work on razor-thin margins,” said Chief Chinedu Ukadike, IPMAN’s Publicity Secretary. “Any extra charge on refining or importation costs will reflect at the pump.”
Meanwhile, the Association of Nigerian Refineries Petroleum Marketers issued a cautious statement of support, calling for the surcharge to be tied to visible improvements in road infrastructure. They advocated for transparent implementation, digital tracking systems, and strong regulatory oversight to avoid a return of malpractice in the downstream sector.
Government’s Fiscal Justification
The Tinubu administration says the tax overhaul—including the Nigeria Revenue Service Act, the Joint Revenue Board Establishment Law, and the Nigeria Tax Administration Act—was designed to modernize revenue collection, promote transparency, and reduce overreliance on oil revenues.
With debt servicing costs rising and subsidy-related fiscal holes still fresh in the country’s finances, the surcharge forms part of a medium-term revenue strategy to enhance sustainability.
Yet the public’s resistance reflects a deeper unease with Nigeria’s current economic trajectory—one where rising taxes and costs of living have yet to be matched by improvements in public infrastructure or social welfare.
As the policy awaits final implementation, all eyes will be on the government’s next move—and whether it can balance revenue ambitions with citizens’ growing frustration.