The 5% Fuel Surcharge: What Is True and What Is Not
Contrary to headlines that spread earlier in the week, the federal government has clarified that the 5% surcharge on5 fossil fuel is not a new tax introduced by the Tinubu administration. The clarification came from the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, who explained that the provision has been in law since 2007 and was only restated in the recently passed Tax Act.
The charge stems from the Federal Roads Maintenance Agency (Amendment) Act of 2007. Its reappearance in the new tax framework is a matter of harmonisation and transparency, not a fresh burden on consumers.
To address public concern, the Chairman of the Tax Committe, Mr Taiwo Oyedele published a set of questions and answers. Below are the key clarifications:
Was the 5% surcharge created by this administration?
No. The provision already exists in the FERMA Act. The new Tax Act only restates it, meaning it was not part of the reform bills sent by the president to the National Assembly.
Does it begin automatically in January 2026?
No. The surcharge will not kick in with the start of the new laws. It can only take effect once the Minister of Finance issues an order, which must be published in the Official Gazette. This safeguard means the timing will be weighed against economic realities before anything changes.
Will it apply to every fuel product?
No. Exemptions include kerosene, cooking gas (LPG), compressed natural gas (CNG), and other clean or renewable energy sources. This aligns with Nigeria’s energy transition plans.
Why keep the surcharge at all?
According to the committee, the charge is a dedicated fund for road maintenance and infrastructure. If properly managed, it would lower logistics costs, cut travel time, and reduce vehicle maintenance expenses. Similar charges exist in over 150 countries, often at rates between 20% and 80%.
Couldn’t subsidy savings cover road funding instead?
Not fully. While subsidyy savings free up funds, they are insufficient to address Nigeria’s large and recurring road needs. A dedicated fund ensures predictable g than leaving road works at the mercy of annual budgets.
Doesn’t this go against the reform goal of reducing taxes?
No. The reforms have already scrapped or suspended several charges affecting households and businesses. VAT on fuel, excise on telecoms, and the cybersecurity levy are some of the charges already removed. By harmonising provisions, the government says it is cutting duplication and simplifying the system.
Why not just scrap the FERMA provision entirely?
The FERMA Act surcharge has been moved into the new harmonised tax laws. The government argues that keeping it in a modern framework allows Nigeria to maintain a clear structure for sustainable road financing and prepare for future challenges, including climate impacts. The emphasis is on having a legal foundation in place, not immediate enforcement.
The bottom line
The 5% surcharge is not a new tax. It is an old law being carried forward for transparency and system efficiency. Its future use will depend on when and how the finance ministry decides to activate it, with exemptions already carved out for essential household fuels.
