By Eshiorameh Sebastian, Abuja
Consumers and businesses across Nigeria received clarification on Sunday morning regarding a potential new cost on fuel, after a government document sought to address growing concerns over a restated 5% surcharge in new tax legislation.
The document, released by StateHouseโขDigital and obtained by SPEAR NEWS, aims to demystify the provision and assuage fears of an immediate increase in pump prices come 2026. Its core message is that the surcharge is not a new levy introduced by the administration of President Bola Tinubu, but a pre-existing one that has been carried over into the new Nigeria Tax Act (2025) for the purpose of legislative “harmonisation and transparency.”
According to the clarification, the charge originates from the Federal Roads Maintenance Agency (Amendment) Act of 2007. Its inclusion in the new, overarching tax code is described as a procedural move for legal consolidation “rather than immediate implementation.”
The document emphasises that the provision “was not part of the original tax reform bills submitted by the president to the National Assembly,” distancing the current administration from its creation.
A key point of reassurance for the public and markets is the mechanism for its activation. The surcharge will not take effect automatically when the new tax laws commence in January 2026. Instead, implementation is contingent on a future decision by the Minister of Finance, who must issue a formal order published in the Official Gazette. This safeguard, outlined in Chapter 7 of the Act, is designed to “ensure careful consideration of timing and economic conditions” before any such fiscal measure is enacted, effectively putting the power to trigger it on hold until the economic climate is deemed suitable.
The government also moved to clarify the scope of the charge, should it ever be implemented. Several key energy products used by households and aligned with cleaner energy goals will be exempt. This exemption list includes household kerosene, cooking gas (Liquefied Petroleum Gas – LPG), and compressed natural gas (CNG). The document states that “clean and renewable energy products are also excluded to align with Nigeria’s energy transition agenda,” signalling a policy intention to not hinder the adoption of alternative fuels.
Addressing the fundamental question of why such a charge exists amidst current economic pressures, the government frames it as a dedicated investment tool for critical national infrastructure. The surcharge is designed to function as a “dedicated fund for road infrastructure and maintenance.” The argument posits that effective implementation would yield significant economic benefits, including “safer travel conditions, reduce[d] travel time and cost, lower logistics costs and vehicle maintenance expenses.”
To justify this approach, the document points to international precedent, noting that this practice is “virtually universal with over 150 countries imposing various charges ranging between 20% to 80% of fuel products to guarantee regular investment in road infrastructure.”
The clarification also addresses why savings from the removal of the fuel subsidy cannot simply be redirected to cover all road funding needs. It states that while subsidy savings “will provide some funding, they are insufficient to meet Nigeria’s huge and recurring road infrastructure needs among other public finance needs.” A ring-fenced fund, the argument goes, “ensures reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.”
Finally, the government contends that this move is consistent with its broader objective of tax reform, which has involved “reducing multiple taxes and remov[ing] or suspended several charges that directly affect households and small businesses.” Examples cited include the Value Added Tax (VAT) on fuel, excise tax on telecoms, and the cybersecurity levy. The harmonisation of such earmarked taxes into one code, the document suggests, is part of creating “a more efficient tax system.”
The ultimate takeaway for Nigerians is that while the legal framework for a fuel surcharge is being solidified for future potential use, its activation is not imminent and is subject to stringent economic oversight, offering a reprieve from immediate concerns over rising energy costs.
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