The Federal Government has introduced a 5% surcharge on fossil-fuel products, a charge that will be applied at the point of sale and take effect from January 1, 2026, under the new tax law enacted this year.
The levy — contained in the Nigeria Tax Administration Act (part of a package of 2025 tax reforms) — will be calculated as five percent of the retail price of chargeable fossil-fuel products. According to the law, the surcharge is chargeable on products provided or produced in Nigeria and will be collected when a taxable transaction (supply, sale or payment) occurs. The measure excludes some energy sources, with household kerosene, cooking gas (LPG) and compressed natural gas (CNG), as well as certain renewable energy products, listed among exemptions.
Officials say the surcharge is intended to discourage fossil-fuel consumption, accelerate a shift toward cleaner energy and help shore up non-oil revenue for the federal purse as part of broader tax-reform efforts. The move has attracted international attention as an example of fiscal measures aimed at both revenue generation and climate policy alignment.
Government analysts estimate the levy could raise significant revenue — with one projection putting potential annual receipts from petrol alone at roughly ₦796 billion, based on 2024 consumption and price estimates. The extra funds are expected to support climate and infrastructure spending under the wider reform agenda.
The proposal has prompted immediate pushback from consumer groups, oil marketers and some analysts, who warn that adding a five-percent charge at the pump could stoke inflationary pressure, raise transport costs and deepen hardship for households already coping with higher prices since the removal of fuel subsidies. Critics have urged the government to provide implementation details, targeted protections for vulnerable citizens, and clear plans for how revenue will be used.
Sign up here with your email
ConversionConversion EmoticonEmoticon