From January 2026, Nigerians could face higher fuel costs as a result of the new Nigeria Tax Administration Act, which introduces a five per cent surcharge on refined fossil fuel products. If the current pump price of petrol remains at N900 per litre, motorists would pay an additional N45 on every litre purchased.
The surcharge is part of four new tax reform bills signed into law by President Bola Tinubu on June 26, 2025, aimed at broadening government revenue streams, encouraging clean energy adoption, and reducing reliance on fossil fuels.
According to the Act, the surcharge will be applied to chargeable transactions, including the supply, sale, or payment for fossil fuel products—“whichever occurs first.” The levy covers petrol, diesel, aviation fuel, and other refined petroleum products.
However, some products are exempt: household kerosene, cooking gas, Compressed Natural Gas (CNG), and renewable energy sources such as solar, wind, and hydropower.
The Act states: “A surcharge is imposed at five per cent on chargeable fossil fuel products provided or produced in Nigeria, and shall be collected at the time a chargeable transaction occurs.”
Implementation and Oversight
Although the law sets January 2026 as the intended commencement date, the exact timing remains subject to a formal directive from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. The minister is expected to announce the effective date through an order published in the Official Gazette.
Administration of the surcharge will fall to the Federal Inland Revenue Service, which will be rebranded as the Nigeria Revenue Service in 2026. The agency has been empowered to collect the levy on a monthly basis and issue further regulations for its enforcement.
Economic and Social Implications
Analysts say the measure reflects government efforts to boost non-oil revenues amid growing fiscal pressures and rising debt obligations. Yet its impact could be controversial, as higher fuel prices often have ripple effects on transportation, food costs, and inflation.
Some argue that the surcharge may accelerate Nigeria’s transition to renewable energy by discouraging heavy dependence on fossil fuels. Critics, however, warn that the immediate effect will be an increased burden on citizens already grappling with high living costs.
The new Act forms part of a broader package of reforms, which also includes the Joint Revenue Board (Establishment) Law and the Nigeria Revenue Service (Establishment) Act, all geared toward strengthening revenue collection and fiscal transparency.
