FG clarifies 5% fuel surcharge ‘not a new tax, no plans to enforce soon’

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, and Finance Minister Wale Edun have clarified that the controversial 5% fuel surcharge is not a new tax but part of a long-standing law intended to support Nigeria’s road infrastructure. They assured the public there are no plans to enforce the levy immediately following the recent tax reform laws.

The 5% levy embedded within the Nigeria Tax Act 2025, scheduled provisionally to take effect in January 2026, aims to generate dedicated funds for the maintenance and improvement of the country’s deteriorating roads. This charge, often referred to as a fuel surcharge, was originally introduced in 2007 under the Federal Road Maintenance Agency (FERMA) Act but was not enacted for years due to the fuel subsidy regime.

Taiwo Oyedele explained that the motor fuel charge is a commonly used practice worldwide, many countries levy similar fees ranging from 20% to 80% of fuel prices to secure consistent funding for road upkeep. He emphasised that the tax reform package was crafted to improve transparency and boost Nigeria’s economic infrastructure. The revenue from the surcharge would be split, with 40% directed to the federal road maintenance agency and 60% allocated to state road management bodies.

Finance Minister Wale Edun added that the surcharge’s inclusion in the 2025 tax legislation merely harmonises existing laws for clarity and enhanced compliance, rather than introducing fresh taxation. He pointed out that the levy cannot be activated automatically; it requires a formal commencement order by the Minister of Finance, published officially before enforcement.

Addressing public concerns, Oyedele acknowledged worries about the economic impact but reassured that the timing of the surcharge could be managed to minimise inflation. For instance, the fee might coincide with periods of currency appreciation or drops in crude oil prices to keep pump prices stable.

Critics and labour unions have voiced opposition, fearing additional financial burdens on Nigerians. Oyedele urged stakeholders to engage through legislative channels rather than strike actions to address concerns about specific provisions.

Moreover, some household energy products such as kerosene, cooking gas (LPG), and compressed natural gas (CNG) are exempt from the surcharge, in order to  support Nigeria’s energy transition goals.

The recently gazetted tax laws mark a major overhaul aimed at streamlining Nigeria’s fragmented fiscal system, reducing overlapping taxes, and making compliance more business-friendly. The reforms consolidate four separate tax laws into one unified framework to drive economic growth and improve revenue collection.