05/09/2025
What to know about FG’s 5% tax on petrol, diesel
Nigeria, Africa’s biggest oil producer, has introduced a five per cent surcharge on petrol and diesel sales, a measure that has sparked debate among citizens, businesses, and policy analysts.
The levy is part of the newly signed Nigeria Tax Administration Act, one of four tax reform bills signed into law by President Bola Tinubu on June 26, 2025.
The regulation requires that the surcharge be applied to every supply or sale of refined fossil fuel products in Nigeria, whether locally produced or imported, with the money collected at the point of sale. Cleaner fuels such as renewables, household kerosene, cooking gas (LPG), and compressed natural gas (CNG) are exempt.
Is this levy really new?
Not entirely. Legal experts note that the five per cent fuel surcharge has been embedded in Nigerian law for nearly two decades. It first appeared under the Federal Roads Maintenance Agency (FERMA) Act of 2007, which mandated that a levy be paid on fuel sales to fund road maintenance.
“The ‘5% petrol surcharge’ is not new. It has been in our laws since 2007 under the FERMA Act,” said corporate lawyer Chima Amanda () in a post on X (formerly Twitter). “The problem is, it was never enforced back then, which is why most people don’t know it exists. What the new tax laws have done is to reintroduce it as part of harmonising all tax laws.”
In 2016, BusinessDay reported that the Senate directed the then Petroleum Products Pricing Regulatory Agency (PPPRA), now the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), to remit ₦634 billion to FERMA.
The sum represented what the agency should have collected as a five per cent fuel surcharge between 2007 and 2015.
In effect, what the Tinubu administration has done is not to create a fresh tax, but to revive a dormant provision that has never been systematically enforced.
When will it take effect?
Speculation has been rife that Nigerians will begin paying the levy from January 2026, but this is not accurate. The Act clearly states that the Minister of Finance must announce the commencement date through a government Gazette before enforcement can begin.
“For now, there’s no extra ₦500 tax on every ₦10,000 petrol purchase,” Amanda clarified. “If that ever changes, the government will make it official.”
This position was echoed by Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who stressed that enforcement will only begin once Finance Minister Wale Edun issues an official order.
