By Peter Omopo
Nigerians will begin paying a 5% fossil fuel surcharge on petrol, diesel, and aviation fuel from 2026 under the new Tax Act 2025, the Presidential Fiscal Policy and Tax Reforms Committee has announced.
The levy, which had previously existed under the Federal Roads Maintenance Agency (Amendment) Act 2007, has now been reinstated for harmonisation and transparency. According to the committee, the revenue will be dedicated to funding road infrastructure and maintenance across the country.
Key Highlights of the Fuel Surcharge
- Rate & Scope: The 5% surcharge applies to all chargeable fossil fuel products, including petrol, diesel, and aviation fuel.
- Collection Point: It will be collected at the point of supply, sale, or payment for the product, whichever occurs first.
- Exemptions: Household kerosene, cooking gas (LPG), Compressed Natural Gas (CNG), and clean or renewable energy products such as solar, wind, and hydropower are exempt.
- Commencement Date: The tax will not take effect automatically in January 2026. It will only begin after the Minister of Finance issues an order published in the Official Gazette.
Chairman of the Committee, Taiwo Oyedele, explained that the surcharge is a global best practice, with over 150 countries imposing similar levies to guarantee regular investment in road infrastructure.
“If implemented effectively, it will provide safer travel conditions, reduce travel and logistics costs, and lower vehicle maintenance expenses, which will benefit the wider economy,” Oyedele said in a post on X.
Addressing Public Concerns
Responding to questions on whether subsidy savings could cover road funding, Oyedele said the resources from subsidy removal were insufficient to meet Nigeria’s recurring infrastructure needs. He also clarified that the surcharge does not contradict the government’s tax reform objectives, as several levies directly affecting households and small businesses — including VAT on fuel, telecoms excise tax, and the cybersecurity levy — had already been removed or suspended.
Fiscal Gains from Reforms
The Presidency has linked Nigeria’s recent revenue boost to such reforms. From January to August 2025, non-oil revenue collections reached ₦20.59 trillion, a 40.5% increase from ₦14.6 trillion in 2024.
President Bola Tinubu, while addressing a delegation of the Buhari Organisation led by Senator Tanko Al-Makura, said the strong fiscal performance had enabled the Federal Government to stop borrowing from local banks since the start of 2025.
The government maintains that the fossil fuel surcharge is not an immediate burden but a forward-looking measure to ensure sustainable funding for critical infrastructure.
