Nigerians to Pay 5% Petrol Tax from January 2026 – What You Need to Know

 

From January 1, 2026, Nigerians will begin paying a 5% surcharge on petrol and other fossil fuel products as part of the Nigeria Tax Administration Act 2025, recently signed into law. The measure is designed to reduce fossil fuel dependence, promote cleaner energy, and boost government revenue.

The surcharge will be applied at the point of sale, meaning whichever comes first—supply, sale, or payment. It covers chargeable fossil fuel products produced or supplied within Nigeria.

The government says the levy will both encourage the transition to cleaner energy and provide extra revenue to support fiscal policies. Analysts note that the surcharge could significantly raise the cost of petrol, which already averages ₦850 per liter as of 2024.

According to consumption data, Nigerians used about 18.75 billion liters of petrol in 2024. With the new surcharge, the government could earn up to ₦796 billion annually from petrol alone.

While the Act sets January 1, 2026 as the effective date, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, must issue an official order for enforcement to begin.

Critics warn the surcharge could worsen the cost-of-living crisis, increasing transport fares and food prices. Supporters argue it is a necessary step toward sustainable energy and reducing reliance on fossil fuels.