Nigerians may soon pay an additional ₦45 per litre of petrol starting in 2026 if pump prices remain at the current average of ₦900. This follows the introduction of a five percent surcharge on refined petroleum products as contained in the 2025 Nigeria Tax Administration Act, signed into law by President Bola Tinubu on June 26, 2025.
The policy, which will take effect from January 2026, is part of a wider tax reform package aimed at discouraging fossil fuel dependence and encouraging investment in clean energy.
The new law states:
“A surcharge is imposed at five per cent on chargeable fossil fuel products provided or produced in Nigeria and shall be collected at the time a chargeable transaction occurs.”
It further explains that the surcharge applies at the point of supply, sale, or payment—whichever comes first.
The Act clarified that fossil fuel products covered under the new regime include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas (CNG) derived from petroleum, coal, or natural gas. However, several items have been exempted.
“The surcharge under this Chapter shall not apply to the following fossil fuel products: (a) clean or renewable energy products; (b) household kerosene; (c) cooking gas; and (d) Compressed Natural Gas,” the law stated.
The Act also defines renewable energy as:
“Energy from solar, wind, hydropower, geothermal, or plant and animal waste, which are naturally replenishing, produce little or no environmental pollution or greenhouse gas emissions and do not deplete over time.
The law empowers the Federal Inland Revenue Service (FIRS)—to be renamed the Nigeria Revenue Service (NRS) in 2026—to manage and collect the surcharge monthly.
“The Service shall administer and collect the surcharge every month and may issue regulations for its administration,” the Act reads.
The exact implementation date is still subject to confirmation by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. According to the Act:
“The minister may, by an Order issued in the Official Gazette, indicate the effective date of commencement of the administration of the surcharge on fossil fuel products under this Chapter.”
The surcharge is part of a broader set of reforms that also established the Joint Revenue Board (Establishment) Law, the Nigeria Revenue Service (Establishment) Act, and the Nigeria Tax Administration Act. Together, the laws aim to improve revenue efficiency, strengthen fiscal transparency, and support Nigeria’s medium-term revenue strategy.
With government borrowing on the rise and fiscal pressures mounting, analysts believe the new surcharge could provide a needed boost to non-oil revenues, though its full impact will depend on when and how it is implemented.
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