Federal Government Projects ₦796bn Annual Revenue from 5% Fuel Surcharge

Nigerians have raised concerns over the Federal Government’s plan to introduce a 5% surcharge on petrol and other fossil fuels starting January 2026 just over a year after the controversial removal of fuel subsidies.

The new tax, part of sweeping reforms under the recently signed Nigeria Tax Administration Act, is expected to generate up to ₦796 billion annually from petrol alone. It forms part of broader efforts to expand non-oil revenue and improve fiscal stability amid rising national debt and dwindling subsidies.

The surcharge will apply to refined fossil fuel products; petrol, diesel, aviation fuel, and others produced or sold within Nigeria. However, exemptions have been made for household kerosene, cooking gas, compressed natural gas (CNG), and clean or renewable energy sources.

According to estimates based on national consumption data, Nigerians used approximately 18.75 billion litres of petrol in 2024 at an average retail price of ₦850 per litre. Applying the proposed 5% surcharge to this figure puts potential government earnings at nearly ₦796 billion from petrol alone excluding diesel and aviation fuel, which would further raise the revenue figure.

Despite the government’s claims that the move will improve revenue collection and fund critical infrastructure, the announcement has drawn widespread criticism from consumers, labour unions, fuel marketers, transport operators, and civil society groups.

Many argue the policy will worsen living conditions in a country already grappling with soaring fuel prices and economic uncertainty. Transport workers and marketers warn that the additional cost will inevitably be passed on to end-users, pushing pump prices even higher.

Akintade Abiodun, head of a major drivers’ union, described the move as “tone-deaf,” accusing the government of treating citizens as “economic experiments” without considering their realities.

Similarly, the Association of Nigerian Refineries Petroleum Marketers has urged caution, calling for transparent implementation mechanisms and warning of possible market distortions. The group acknowledged the failures of past subsidy regimes but insisted that new levies must be matched with clear accountability frameworks.

“If this surcharge is to fund road repairs or infrastructure, Nigerians deserve to see immediate and visible improvements. Otherwise, it will just deepen public mistrust,” said Usman Ali, chairman of the group’s Board of Trustees.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) also warned that the surcharge would affect retail fuel pricing. Spokesperson Chinedu Ukadike explained that the levy would be absorbed into refineries’ and importers’ pre-pricing structures, which would in turn raise pump prices.

“Marketers operate on narrow profit margins. Any added cost in the supply chain ends up at the filling station,” he said.

Human rights advocates have also weighed in, with Jackson Omenazu of the International Society for Social Justice warning that unpopular economic measures could trigger wider unrest.

“Citizens are already stretched to their limits. Imposing new fuel taxes without real relief or infrastructure improvements sends the wrong message,” he said. “There’s a growing disconnect between policy makers and everyday Nigerians.”

Though the law is already in place, the implementation date remains undecided. The Finance Minister will determine when the surcharge takes effect, and the Nigeria Revenue Service, formerly the Federal Inland Revenue Service will oversee monthly collection and administration.

As the clock ticks toward January 2026, Nigerians continue to demand that any new revenue measures be matched with transparency, fairness, and a clear plan for economic relief.