The Nigerian government is projected to make about N796 billion each year through a new 5% surcharge on both locally made and imported petrol.

This tax will become active starting January 1, 2026, following the introduction of new tax laws.

President Bola Tinubu approved four new tax laws on June 26, 2025.

One of these laws, part of the Nigeria Tax Administration Act, includes a 5% tax on fossil fuels.

The new rule states that fossil fuel products such as diesel, aviation fuel, kerosene, and others will face this tax. However, renewable energy items, household kerosene, cooking gas, and compressed natural gas are not included.

According to the law, the 5% fee will be collected any time a fossil fuel transaction takes place in Nigeria.

A review of petrol consumption in Nigeria in 2024 shows that with 18.75 billion litres used and an average price of N850 per litre, the government stands to earn around N796 billion just from petrol alone.

Additional earnings will come from the same 5% tax on other fossil fuels, making the total revenue even higher.

However, fuel sellers and marketers are against this new tax, saying it will push petrol prices even higher.

The Independent Petroleum Marketers Association of Nigeria said the cost will be passed to consumers at the fuel stations since marketers cannot handle the extra cost.

As of July 30, 2025, petrol prices in major Nigerian cities like Lagos and Abuja ranged from N865 to N905 per litre at popular stations such as MRS, NNPC, AP, Ardova, and others.