Nigerian govt to earn N796bn yearly from 5% petrol surcharge

The Nigerian government will rake in an estimated N796 billion in revenue annually from a five percent surcharge on locally produced and imported premium motor spirit.

This will be the case upon the implementation of the country’s new tax laws, expected to take effect from January 1, 2026.

Recall that President Bola Ahmed Tinubu signed four new tax bills into law on June 26, 2025.

The 5 percent surcharge on fossil fuel is contained in one of four new tax acts, under the Nigeria Tax Administration Act.

In a document of the new tax policy, the 5 percent surcharge targets fossil fuel products provided or produced in Nigeria, including diesel, kerosene, aviation fuel, and compressed natural gas, among others. However, the tax excludes renewable energy products and household kerosene, cooking gas, and compressed natural gas.

“A surcharge is imposed at five percent on chargeable fossil fuel products provided or produced in Nigeria and shall be collected at the time a chargeable transaction occurs,” the law reads in part.

An analysis of the total volume of Nigeria’s imported and refined petrol as of 2024, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, showed that the government could earn N796 billion annually from the 5 percent surcharge from fuel only.

A further breakdown showed that NMDPRA’s data for 2024 indicate that the country’s total volume of petrol consumed by Nigerians reached 18.75 billion litres; this translates to N15.93 trillion, using the average price of N850 for a litre of petrol consumed in Nigeria during the review period. For emphasis, a combination of the 5 percent surcharge on other fossil fuel products would be more than N796 billion.

Meanwhile, petroleum product marketers and retailers have kicked against the 5 percent surcharge, noting that it would further worsen petrol pricing in the country.

Reacting, the spokesman of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said Nigerians will bear the burden of any additional tax on petrol because the cost will reflect on the petrol pump price.

“Any additional levy will reflect on the price of petrol across Nigeria. Marketers cannot absorb the additional burden,” he said.

SOCIETY WATCH reports that as of Wednesday, July 30, 2025, fuel prices stood between N865 and N905 per litre at MRS, Nigerian National Petroleum Company Limited, AP Ardova, Optima, Bova, Ranoil, AA Rano, and other filling stations in Lagos State and Abuja.