The Act imposes a five per cent surcharge on refined fossil fuel products, meaning if the current pump price of petrol stays at ₦900 per litre, motorists will pay an additional ₦45 per litre.
The surcharge applies to petrol, diesel, aviation fuel, and other refined petroleum products, while household kerosene, cooking gas, Compressed Natural Gas (CNG), and renewable energy sources such as solar, wind, and hydropower are exempt.
According to the law:
“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.”
Implementation & Oversight
Although the law is set to commence in January 2026, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, will officially declare the start date via the Official Gazette.
Collection of the levy will be handled by the Federal Inland Revenue Service (FIRS), which will be rebranded as the Nigeria Revenue Service (NRS) in 2026. The agency is empowered to collect the surcharge monthly and issue guidelines for enforcement.
Economic & Social Implications
Economic experts say the surcharge signals government efforts to boost non-oil revenues amid growing fiscal pressures and debt obligations. However, the likely increase in fuel costs is expected to ripple across the economy, raising transportation fares, food prices, and general inflation.
While some analysts argue the surcharge could push Nigeria toward renewable energy adoption, critics warn it will deepen the financial strain on households already struggling with high living costs.
The fossil fuel surcharge is part of a broader reform package, including the Joint Revenue Board (Establishment) Law and the Nigeria Revenue Service (Establishment) Act, all aimed at strengthening revenue mobilization and fiscal transparency.
