Oil Tankers
ABUJA, 31 July 2025 — The Federal Government may generate as much as N796bn annually through a proposed five per cent surcharge on locally produced and imported petrol, according to an analysis of the Nigeria Tax Administration Act signed into law by President Bola Tinubu on 26 June 2025.
The new tax measure, which is set to take effect from 1 January 2026, forms part of a wider fiscal reform package contained in four recently signed tax laws. It targets refined fossil fuel products such as petrol, diesel, kerosene, aviation fuel and Compressed Natural Gas. However, household kerosene, cooking gas and clean or renewable energy sources will be exempt.
Findings indicate that the surcharge will be applied to the retail price of the products at the point of sale, supply or payment—whichever occurs first. Calculations based on 2024 consumption data provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) indicate that 18.75 billion litres of petrol were consumed, translating to a market value of N15.93 Trillion at the average pump price of N850 per litre. A five per cent surcharge on that figure amounts to N796bn in potential revenue from petrol alone.
This projection does not yet account for similar earnings from diesel and aviation fuel, implying that the total revenue impact could be significantly higher once the policy is fully implemented.
Responsibility for collection will rest with the Federal Inland Revenue Service, which will be restructured and renamed the Nigeria Revenue Service in 2026. Monthly collections and regulations for enforcement will be under its remit, subject to further directives from the Minister of Finance, Wale Edun, who must approve the final implementation date.
While the government sees the surcharge as part of a broader push to increase non-oil revenue and ease debt pressures, public reception has been mixed.
Consumers, civil society groups and industry stakeholders have expressed concern over the timing and impact of the policy. Critics argue that the surcharge will further burden Nigerians who are already dealing with high fuel prices following the removal of the subsidy earlier this year.
National Chairman of the Joint Drivers Welfare Association, Akintade Abiodun, described the move as exploitative, accusing authorities of testing economic policies on everyday citizens. “They think we won’t react just because we were quiet the last time they increased fuel. Now they want to add another cost. This must be reversed,” he said.
Similarly, the Association of Nigerian Refineries Petroleum Marketers has warned of operational difficulties and broader economic consequences for both businesses and households if the charge is implemented without safeguards. Speaking at a press conference, Usman Ali, Chairman of the association’s Board of Trustees, called for digital monitoring systems and transparent procurement practices to prevent abuse.
Ali added that while infrastructure upgrades are necessary, any new levy must be linked to visible improvements. “The charge must not just go into thin air—it should directly support road repairs and transport safety,” he stated.
Jackson Omenazu, Chancellor of the International Society for Social Justice and Human Rights, also voiced strong opposition, describing the policy as anti-people. He said lawmakers should focus on policies that prioritise public welfare, especially during economically difficult times.
“With rising public frustration, the government must tread carefully. Nigerians need relief, not more hardship,” he cautioned.
As the implementation timeline remains open pending ministerial approval, discussions around the surcharge are expected to continue both within policy circles and among affected groups nationwide.
0 Comments