In a bold fiscal move aimed at shoring up Nigeria’s non-oil revenue, the Federal Government has introduced a five per cent surcharge on refined petroleum products, potentially generating up to N796 billion annually from petrol alone, beginning January 1, 2026. However, the policy has sparked sharp reactions from industry stakeholders, civil society groups, and everyday consumers grappling with Nigeria’s harsh economic realities.
The new levy, embedded in the Nigeria Tax Administration Act, is one of four tax reform bills signed into law by President Bola Ahmed Tinubu on June 26, 2025. The surcharge will apply to all “chargeable fossil fuel products,” including petrol, diesel, aviation fuel, and more, with household kerosene, cooking gas, Compressed Natural Gas (CNG), and renewable energy products explicitly exempted.
A review of national petrol consumption by our correspondent, reveals that Nigerians used 18.75 billion litres of petrol in 2024. At an average pump price of N850 per litre, this translates to a total spend of N15.93 trillion. Applying a 5% surcharge yields N796 billion — revenue the government is poised to collect annually from petrol alone, excluding earnings from diesel and aviation fuel.
The surcharge, according to the Act, will be collected at the point of sale, supply, or payment — “whichever occurs first.” The Federal Inland Revenue Service (FIRS) — which is set to become the Nigeria Revenue Service by 2026 — will administer and collect the tax monthly, issuing additional regulations to guide its implementation.
The announcement has drawn heavy criticism from consumers, civil society, and petroleum marketers alike. Many say the government is acting insensitively by introducing new charges barely a year after removing petrol subsidies — a decision that has already caused hardship due to rising transportation and living costs.
Akintade Abiodun, Chairman of the Joint Drivers Welfare Association, described the surcharge as a tone-deaf policy, calling Nigerians “lab rats” for the government’s economic experiments.
In the same vein, the Association of Nigerian Refineries Petroleum Marketers voiced conditional support but demanded transparency and accountability. Its Board of Trustees Chairman, Usman Ali, said while infrastructure development is essential, any new levy must be directly tied to visible improvements such as road rehabilitation.
Meanwhile, Jackson Omenazu, Chancellor of the International Society for Social Justice and Human Rights, called the policy “anti-people,” warning that continued economic pressure without relief could spark mass unrest.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also expressed concerns. Chief Chinedu Ukadike, IPMAN’s National Publicity Secretary, warned that the surcharge will increase pump prices, as refineries and importers are likely to pass the additional cost to retailers — and ultimately, consumers.
“The pricing formula may adjust, but the reality is that Nigerians will feel it. Our downstream sector operates on thin margins and cannot absorb this kind of financial shock without ripple effects,” Ukadike said.
Despite the backlash, government insiders say the surcharge is critical to enhancing non-oil revenue, reducing Nigeria’s reliance on external borrowing, and meeting medium-term fiscal goals. The surcharge, once effective, is expected to play a significant role in plugging budget deficits and financing infrastructure projects.
However, the implementation date is still subject to an official gazette to be issued by Wale Edun, Minister of Finance and Coordinating Minister of the Economy. Until then, stakeholders await clarity on how the policy will roll out — and whether there will be room for modification following nationwide feedback.
With over N796bn in potential earnings from petrol alone, the federal government views the surcharge as a necessary measure in a difficult fiscal environment. However, without cushioning the impact on citizens and ensuring transparency in fund usage, this policy may face not only public resistance but also serious political and economic consequences.