New Fuel Surcharge to Generate N796bn Annually for FG, Consumers Decry Imminent Hike

The Federal Government is set to introduce a five per cent surcharge on locally produced and imported petrol, a move projected to rake in an estimated N796 billion annually, according to an analysis by The PUNCH. This new tax policy, enshrined in the recently signed Nigeria Tax Administration Act, is slated to take effect from January 1, 2026.

The five per cent surcharge on refined petroleum products is one of four tax reform bills signed into law by President Bola Tinubu on June 26, 2025. A copy of the Act, obtained by correspondents on Wednesday, July 30, 2025, reveals that the surcharge will be imposed on all “chargeable fossil fuel products” and computed based on their retail price.

The levy is a key component of the government’s efforts to significantly boost non-oil revenues and promote fiscal sustainability, particularly in the wake of mounting public debt and the substantial costs associated with the now-removed fuel subsidy. Fossil fuel products covered include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas, among others. However, household kerosene, cooking gas, Compressed Natural Gas (CNG), and clean or renewable energy products are exempted.

An analysis based on the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s (NMDPRA) 2024 consumption and refining capacity data indicates that the government could generate N796 billion annually from petrol alone. With a total volume of 18.75 billion litres of petrol consumed in 2024 at an average price of N850 per litre, five per cent of the total value translates directly to the projected annual earning. This figure is expected to be even higher once surcharges from other fossil fuel derivatives like diesel and aviation fuel are factored in.

The new law tasks the Federal Inland Revenue Service (FIRS), which is to be renamed the Nigeria Revenue Service by 2026, with administering and collecting the surcharge monthly. While the Act specifies January 1, 2026, as the commencement date, its actual implementation remains subject to an official order by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

Consumers and Marketers Express Outrage

However, the impending tax has ignited widespread opposition from various segments of society, including consumers, oil marketers, transport workers, farmers, human rights advocates, and civil society groups. They argue that the government’s decision to impose an additional charge on fuel, particularly after the removal of subsidies, shows a disregard for the already harsh economic realities faced by Nigerians.

Akintade Abiodun, National Chairman of the Joint Drivers Welfare Association, vehemently accused the government of treating Nigerians as “lab rats” for unpopular economic decisions. “The powers that be in this country are taking us for a ride. They think we won’t react just because we were quiet the last time they increased fuel. Now they want to add another cost on top of the already expensive pump price. This must be reversed,” he asserted.

Oil marketers have also raised alarms, warning that the five per cent surcharge is likely to further hike the pump prices of refined petroleum products. Chief Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), explained that while the levy would initially be factored into the pre-pricing structure by industry players, the financial burden would ultimately be transferred to consumers.

“Any additional charge on the cost of importation or refining of petroleum products will, by extension, reflect in the final retail price. This is because marketers operate on thin margins and cannot absorb such levies without a ripple effect,” Ukadike told The PUNCH on Wednesday.

The Association of Nigerian Refineries Petroleum Marketers, through its National Chairman of the Board of Trustees, Usman Ali, acknowledged the past failures of the subsidy system but cautioned against a return to malpractices. The association conditionally supported the levy if it is transparently tied to visible and immediate road infrastructure rehabilitation, advocating for digital tracking systems and transparent procurement procedures.

Jackson Omenazu, Chancellor of the International Society for Social Justice and Human Rights, lambasted the government for pursuing what he termed “anti-people” policies, warning that continued disregard for citizens’ suffering could lead to public frustration escalating.