The Nigerian Federal Government is set to introduce a five per cent surcharge on petrol from January 2026, potentially generating about N796 billion annually, according to an analysis of current consumption and pricing data. This financial move comes as part of a broader tax reform signed into law in June by President Bola Tinubu, aimed at boosting non-oil revenue streams and promoting fiscal sustainability. The surcharge is detailed in the Nigeria Tax Administration Act, effective next year pending the Minister of Finance’s approval.
The surcharge will apply to all locally produced and imported refined petroleum products, including petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas, though exemptions apply to clean or renewable energy products and household kerosene, cooking gas, and CNG.
Using data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), findings obtained by okay.ng reports show the nation consumed about 18.75 billion litres of petrol in 2024. At an average retail price of N850 per litre, the five per cent surcharge on petrol sales alone could yield nearly N796 billion annually for the government.
The legislation mandates the Federal Inland Revenue Service — to be renamed Nigeria Revenue Service by 2026 — to administer and collect the surcharge monthly. It stipulates the levy’s calculation at five per cent of the retail price, charged at the point of supply, sale, or payment, whichever occurs first.
However, the policy is already facing resistance from various sectors. Transport workers, oil marketers, farmers, civil society groups, and human rights advocates have voiced concerns that this surcharge, coming on the heels of subsidy removals, will further strain households already struggling with high fuel costs. Akintade Abiodun, National Chairman of the Joint Drivers Welfare Association, criticized the government for treating Nigerians as “lab rats” subjected to “unpopular economic decisions.”
Usman Ali, Chairman of the Board of Trustees for the Association of Nigerian Refinery Petroleum Marketers, acknowledged subsidy failures and corruption but warned the surcharge must be accompanied by robust regulation and transparent road maintenance initiatives to justify the consumer burden.
Jackson Omenazu, Chancellor of the International Society for Social Justice and Human Rights, condemned the policy as “anti-people” and predicted growing public frustration if government leadership continues to neglect citizens’ hardships.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also cautioned that the surcharge would lead to increased pump prices despite hopes of stabilizing revenues. Chief Chinedu Ukadike, IPMAN’s National Publicity Secretary, explained that any added cost in importation or refining inevitably passes to consumers as marketers operate on thin margins.
The final implementation date remains pending ministerial order and may alter depending on economic and political considerations. The surcharge is part of four tax reform laws aiming to improve revenue collection efficiency amid Nigeria’s rising public debt and fiscal deficits.
Okay.ng reports that while the surcharge poses challenges for consumers, its real impact will depend on regulatory follow-through and the government’s accountability in spending revenues targeted for infrastructure improvements such as road maintenance.
