The Federal Government may rake in N796bn annually from the introduction of a five per cent surcharge on locally produced and imported petrol, based on its new tax policy slated to take effect from January 1, 2026.
The five per cent surcharge on refined petroleum products is contained in the Nigeria Tax Administration Act, one of four tax reform bills signed into law by President Bola Tinubu on June 26, 2025. Our correspondent obtained a copy of the Act on Wednesday.
However, consumers have opposed the move, stressing that the government had earlier removed fuel subsidies and now plans to impose a five per cent surcharge on fuel, without considering the harsh economic realities nationwide.
This came as oil marketers stated that the five per cent surcharge may further hike the pump prices of refined petroleum products.
The surcharge forms part of government efforts to shore up non-oil revenues and promote fiscal sustainability amid mounting public debt and subsidy-related costs. The policy targets fossil fuel products provided or produced in Nigeria.
Fossil fuel products include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas, among others. They are derived from the processing of fossil fuels such as coal, petroleum, and natural gas.
However, items exempted from the new tax are clean or renewable energy products, as well as household kerosene, cooking gas, and Compressed Natural Gas.
Findings showed that the government would garner about N796bn annually from only petrol once the five per cent surcharge takes effect.
An analysis by our correspondent, using the volume of imported and refined petrol, showed that the government could earn N796bn based on the 2024 estimates of national consumption and refining capacity production data provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
This N796bn is purely for petrol and doesn’t include other fossil fuel derivatives such as diesel and aviation fuel.
A breakdown of data from the NMDPRA shows that the total volume of petrol consumed by Nigerians reached 18.75 billion litres in 2024. NMDPRA, an agency of the Federal Government, is the mid- and downstream regulator of the oil and gas industry.
The 18.75 billion litres of petrol translates to about N15.93tn, using the average price of N850 for a litre of petrol consumed in Nigeria during the review period. Five per cent of N15.93tn represents N796bn, which is the sum that the Federal Government may rake in annually from only petrol once it implements the planned surcharge.
This, therefore, implies that the government’s earnings from the proposed surcharge on fossil fuel products (petrol, diesel, and aviation fuel) would be more than N796bn once the five per cent surcharge policy on refined petroleum products takes effect, after being approved by the Minister of Finance, as stated in the Act.
