The opposition against the new 5 per cent fuel surcharge under the 2025 Nigeria Tax Administration Act (NTAA), has continued to increase as the Manufacturers Association of Nigeria (MAN), consumers, Civil Society Organisations(CSOs) and marketers have warned that the tax would push petrol and diesel prices even higher next year, adding to the strain of the 2023 subsidy removal.
They warned that the tax would increase the cost of living, further reduce the already low purchasing power of the average Nigerian and drive more Nigerians into poverty in 2026.
Sunday Telegraph reports that starting January 2026, Nigerians would face a fresh increase in fuel prices if the government goes ahead to enforce the new 5 per cent surcharge on petrol, diesel, and other fossil fuels, as stipulated in the Nigeria Tax Administration Act (NTAA) 2025.
The new 5 per cent fossil fuel surcharge applies to locally produced and refined petroleum products like petrol and diesel to promote clean energy use and raise revenue, but exempts cooking gas, Compressed Natural Gas (CNG), solar, and other clean sources.
Signed into law in June 2025, the surcharge is set to be effective from January 2026 and will be calculated on the retail price.
Currently, Nigerians pay between ₦860 and ₦1,000 per litre of petrol following the fuel subsidy removal in 2023.
The new surcharge will be applied on top of existing pump prices, meaning consumers could pay an additional ₦42.50 per litre, according to estimates by Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN).
In 2024, Nigeria consumed approximately 18.75 billion litres of petrol, valued at about ₦15.93 trillion (based on an average of ₦850/litre), according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
A 5 per cent surcharge on this volume would generate roughly ₦796.5 billion in new revenue, with even more expected from diesel and aviation fuel.
This N796 billion is purely for petrol and doesn’t include other fossil fuel derivatives such as diesel and aviation fuel.
This, therefore, implies that the government’s earnings from the proposed surcharge on fossil fuel products (petrol, diesel, and aviation fuel) would not be less than N1 trillion 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.
The surcharge forms part of government’s 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.
It will be collected monthly by the Federal Inland Revenue Service (FIRS), which is set to be renamed the Nigeria Revenue Service (NRS).
Consumers kick
However, consumers have opposed the move, stressing that the government had earlier removed fuel subsidies and now plans to impose a 5 per cent surcharge on fuel, without considering the harsh economic realities nationwide.
This came as oil marketers stated that the 5 per cent surcharge may further hike the pump prices of refined petroleum products.
Marketers, transport workers and civil society groups across Nigeria have raised opposition to the proposed implementation of the fuel tax.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) warned that while the surcharge may be absorbed in the supply chain initially, it will ultimately hit the pump.
“Marketers operate on razor-thin margins,” said IPMAN’s spokesperson, Chief Chinedu Ukadike.
“Any extra cost on import or refining directly affects what consumers pay.” He added that the new tax would likely cause another round of fuel price hikes, worsening inflation and reducing mobility for the ordinary Nigerians.
Also speaking, the National Chairman of the Joint Drivers Welfare Association, Akintade Abiodun, accused the government of using Nigerians as “lab rats” for unpopular economic decisions.
On his part, the Chancellor of the International Society for Social Justice and Human Rights, Jackson Omenazu, criticised the government for pursuing policies that are “anti-people.”
He warned that growing public frustration could explode if authorities continued to ignore the sufferings of citizens.
Omenazu said: “How can lawmakers sit in the comfort of their offices, after increasing their own allowances, to approve policies that will send poor Nigerians to early graves?”
Impact on cost of living
According to experts, the fuel tax would increase the cost of living by raising fuel prices, which directly inflates transportation costs and the prices of goods and services.
This, they said, would intensify existing hardship for households, as stagnant incomes and reduced purchasing power mean even small financial burdens have a significant impact.
“The added expense will likely be felt across various sectors, making basic necessities and services, from food and school fees to medical care and electricity, less affordable,” they stressed.
According to the Manufacturers Association of Nigeria (MAN), the new 5 per cent fuel tax, will worsen the operating environment for manufacturers, increase production costs, and contribute to higher inflation and prices for goods in Nigeria, and could further heighten rising value of unsold finished goods, which reached N2.14 trillion in 2024.
MAN’s Director General, Segun Ajayi-Kadir, lamented that the government made these decisions, including the 4 per cent FoB charge and the 5 per cent fuel tax, without adequate consultation or assessment of the impact on businesses and the economy.
However, climate and energy governance expert, Daniel Oladoja, sees the tax differently.
According to him, the 5 per cent surcharge was a brilliant effort to wean the country off its long-term addiction to fossil fuels. “This policy demonstrates proactive thinking and fiscal foresight on the part of the government. If done properly, it has the potential of helping to decouple Nigeria’s economic growth from carbon emissions, actualise its NDC commitment, and mobilise finance for sustainable development,” he said.
Coming on heels of the government removal of the fuel subsidy two years ago, coupled with the recent surge in electricity tariff, “has led to an accelerated renewable energy adoption and an explosion in solar uptake. As a result, the country moved to 4th place in Africa for solar energy adoption in 2024 with an addition of 63.5 MWp of capacity, bringing its total installed capacity to 385.7 MWp as people scrambled to find cheaper alternative sources of energy,” Oladoja said.
