The Federal Government is set to rake in an estimated N796 billion annually from a proposed 5% surcharge on all refined petroleum products, including petrol and diesel.

This levy, part of the newly signed Nigeria Tax Administration Act, takes effect on January 1, 2026, and is seen as a move to boost non-oil revenue amid rising debt and fiscal pressures.

Policy targets fossil fuel derivatives nationwide

The surcharge will apply to all fossil fuel products, whether refined or imported into Nigeria, including petrol, diesel, aviation fuel, and other related products.

However, certain products such as cooking gas, household kerosene, and compressed natural gas are exempt.

The tax will be calculated based on the retail price of each product, with the Federal Inland Revenue Service responsible for monthly collection.

N796bn windfall from petrol alone

Based on 2024 consumption figures from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), petrol consumption stood at 18.75 billion litres, valued at N15.93 trillion using an average price of N850 per litre.

A 5% surcharge on this volume would yield N796 billion annually, excluding additional revenues from diesel and aviation fuel.

Public outcry over potential price hike

The announcement has triggered public backlash, with many Nigerians accusing the government of being insensitive to prevailing economic hardships.

Consumer groups, transport workers, and human rights advocates argue that introducing a new charge so soon after removing fuel subsidies will exacerbate inflation and deepen poverty.

Some fear this may lead to civil unrest if the government fails to reconsider.

Oil marketers warn of rising pump prices

The Independent Petroleum Marketers Association of Nigeria (IPMAN) warned that the surcharge will ultimately push pump prices higher.

Though the charge will be absorbed in pre-pricing calculations by refineries and importers, the added cost is expected to filter down to consumers.

According to a report by Punch, IPMAN stressed that marketers operate on tight margins and cannot absorb the additional burden without adjusting prices.

Industry calls for transparent implementation

While the Association of Nigerian Refineries Petroleum Marketers acknowledged the need to boost infrastructure funding, it urged the government to implement the policy transparently.

The group advocated for digital tracking and oversight to prevent corruption and price manipulation, warning that the failure of past subsidy regimes must not be repeated.

Critics slam FG’s “anti-people” policies

Civil society leaders have strongly criticised the levy, accusing the government of prioritising revenue over citizen welfare.

Jackson Omenazu of the International Society for Social Justice and Human Rights said the policy risks pushing vulnerable Nigerians deeper into hardship.

He warned that continued insensitivity from the authorities could trigger mass protests and social instability.

Energy policy analyst, Adeola Yusuf, revealed that the new levy, while increasing the government’s revenue, may add to the burden felt by Nigerians.

"This will definitely affect fuel prices and may have a ripple effect on other sectors, such as transport, food, housing, and other things.

Nigeria’s economy is standing on three legs, one of which is petroleum products. Anything happening in that sector is instantly felt across other sectors,” he said.

Dangote battles marketers over fuel imports

Legit.ng earlier reported that Aliko Dangote, President of Dangote Group, has called on President Bola Tinubu to expand the 'Nigeria First' policy by banning the importation of refined petroleum products.

His request, made at a major industry conference, has sparked intense backlash from independent oil marketers and sector analysts who say such a move could cripple competition and empower a monopoly.

The ‘Nigeria First’ directive, announced in May 2025, restricts government agencies from importing goods and services that are already available locally, unless granted a special waiver.