As Nigeria prepares to implement a new tax policy starting January 2026, the government is set to introduce a five percent surcharge on locally produced and imported petrol, potentially generating N796 billion annually. This move, embedded within the Nigeria Tax Administration Act signed into law by President Bola Tinubu in June 2025, aims to boost non-oil revenues and promote fiscal sustainability amid mounting public debt and subsidy costs.

What Is the Fuel Surcharge?
The surcharge applies to “chargeable fossil fuel products,” including petrol, diesel, kerosene, aviation fuel, and compressed natural gas. However, renewable energy sources and certain household fuels such as cooking gas and household kerosene are exempt. The law mandates that the surcharge be calculated based on the retail price of these products and collected during transactions such as sales or payments.

Projected Revenue from Petrol
In 2024, Nigeria consumed approximately 18.75 billion litres of petrol, with an average price of N850 per litre. This results in a total estimated consumption value of about N15.93 trillion. A five percent surcharge on this amount would translate to roughly N796 billion annually. Importantly, this figure pertains solely to petrol and does not include other fossil fuels like diesel or aviation fuel, suggesting that total revenue from the surcharge could be even higher.

Implementation Details
The law states that the actual implementation date remains undecided, pending approval from the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun. Once activated, the Nigeria Revenue Service — which will be renamed the Nigeria Revenue Service by 2026 — will oversee the collection and administration of the surcharge.

Public and Industry Reactions
While the government views the surcharge as a necessary step toward diversifying revenue sources, opposition is mounting. Consumers, transport workers, and industry stakeholders have expressed concern over additional financial burdens, especially given Nigeria’s economic hardships.

The Nigeria Association of Petroleum Marketers warned that the surcharge could lead to higher pump prices. Industry insiders note that while the surcharge might initially be absorbed into pre-pricing calculations, the ultimate effect will likely be passed on to consumers, raising costs at the pump.

Calls for Caution and Accountability
Various groups have criticised the policy as potentially anti-people. Critics argue that such levies, especially when introduced without clear infrastructure improvements or regulatory safeguards, could exacerbate economic difficulties for ordinary Nigerians. There is an urgent call for transparent implementation, digital tracking systems, and effective regulation to prevent malpractice and ensure that the revenues are channeled into meaningful development projects such as road maintenance.

Nigeria’s move to impose a five percent surcharge on fossil fuels represents a strategic effort to increase non-oil revenue streams. While the potential for significant fiscal gains exists, successful implementation will depend heavily on transparency, regulatory oversight, and public communication. Nigerians and industry stakeholders alike are watching closely to see how this policy unfolds, hoping it will ultimately serve the country’s economic interests without undue hardship on consumers.