Nigerians Face Higher Fuel Costs in 2026 as New Tax Law Imposes 5% Surcharge on Petrol and Diesel
From January 2026, Nigerians may see a significant increase in fuel prices following the introduction of the Nigeria Tax Administration Act, which places a five per cent surcharge on refined fossil fuel products.
If the current pump price of petrol remains at ₦900 per litre, motorists would pay an additional ₦45 per litre at filling stations.
The Act, signed into law by President Bola Tinubu on June 26, 2025, is one of four new tax reforms designed to broaden government revenue streams, encourage clean energy adoption, and reduce dependence on fossil fuels.
“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,” the Act states.
What Products Will Be Affected?
The surcharge applies to:
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Petrol (PMS)
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Diesel (AGO)
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Aviation fuel (Jet A1)
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Other refined petroleum products
Exempt products include:
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Household kerosene
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Cooking gas (LPG)
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Compressed Natural Gas (CNG)
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Renewable energy sources such as solar, wind, and hydropower
Oversight and Implementation
Although the law specifies January 2026 as the commencement date, its actual enforcement will depend on a formal directive from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who must issue an order in the Official Gazette.
The surcharge will be administered by the Federal Inland Revenue Service (FIRS), which will transition into the Nigeria Revenue Service (NRS) in 2026. The agency will collect the levy monthly and release additional enforcement guidelines.
Economic and Social Implications
Analysts suggest the surcharge reflects government efforts to boost non-oil revenues in the face of mounting fiscal pressures and rising debt.
However, its introduction is likely to have mixed outcomes:
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Higher living costs: Fuel price increases typically trigger hikes in transportation fares, food costs, and overall inflation.
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Push for clean energy: By making fossil fuels more expensive, the policy may accelerate Nigeria’s adoption of renewable energy sources.
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Public backlash: Citizens already struggling with high inflation may view the surcharge as an additional burden.
The surcharge is part of a broader reform package that also includes the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Law, aimed at strengthening fiscal transparency and revenue collection.
The Bureau News will continue monitoring updates as the official commencement date approaches.
