Year in Review: 15% Petrol/Diesel Levy, Multiple Taxes That Could Rip Through Household Budgets
- Nigerians woke up in late 2025 to a shocking announcement of a new levy on petroleum products, specifically, diesel and petrol
- The two petroleum products represent a sensitive point in Nigeria, with consumers being very particular about prices
- The Nigerian government also introduced a 5 per cent fossil fuel surcharge embedded in the updated tax law
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s government has signalled a shift in how petroleum products like petrol and diesel will be taxed starting in 2026.
Two major policy moves have sparked public debate: a proposed 15 per cent levy on imported petrol and diesel, and a broader 5 per cent fossil fuel surcharge embedded in the updated tax law.
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These measures are meant to boost revenue and support domestic refining, but critics warn they might also raise costs for Nigerians already struggling with high fuel prices.
What the 15% levy means
Late in 2025, President Bola Tinubu approved a plan to impose a 15 per cent ad valorem import duty on petrol and diesel.
This tariff is calculated on the cost, insurance, and freight (CIF) value of imported fuel, to protect and encourage local refining capacity.
Reacting to the new levies, Mary Efombruh, a social media commentator, said the taxes on the petroleum products are too much for Nigerians to bear.
"There are about four taxes on petroleum products alone and that is too much for Nigerians," she said.
The idea is that higher costs for imported fuel will make locally refined petrol and diesel more competitive, stimulating domestic production and reducing import dependence, a New Telegraph report said.
The measure also aligns with broader fiscal reforms: Nigeria is working to strengthen revenue inflows and cut its reliance on volatile global oil markets.
But despite initial approval, authorities later deferred the implementation of this duty until early 2026 to allow more time for preparation and ensure domestic refineries are better positioned to supply the market.
Supporters of the tariff say it can help stabilise the energy sector and protect strategic local investments like the Dangote Petroleum Refinery, one of Africa’s largest, by making the import of cheaper fuel less attractive.
Business groups, including the Nigeria Employers’ Consultative Association, have publicly endorsed the policy on those grounds.
The 5% fuel surcharge: Another layer of tax
Separately, the revised Tax Administration Act 2025 introduced a 5 per cent surcharge on petrol, diesel, and other fossil fuel products.
This levy, which technically forms part of the new tax framework and is scheduled for 2026, is intended to broaden the government’s revenue base and fund infrastructure projects such as road maintenance.
Analysis suggests this surcharge could bring in significant revenue — an estimated N796 billion annually from petrol alone, if it is eventually enforced.
However, multiple government statements have clarified that there is currently no immediate plan to implement the 5 per cent fuel tax, despite its inclusion in the law.
Officials say this provision has existed under previous legislation and that a formal commencement order has not been issued. This has led some observers to caution against assuming it will automatically start on January 1, 2026, AFP reported
Concerns over prices and cost of living
One of the biggest criticisms of these levies is that they risk driving fuel prices even higher.
Nigerians are already paying steep prices at the pump following the removal of subsidies and wider economic pressures.
Oil marketers have warned that a 15 per cent import duty could push petrol prices above ₦1,000 per litre, far beyond what many households can easily absorb.
Critics also argue that local refining capacity is not yet sufficient to replace imported fuel, meaning the levy could, paradoxically, tighten supply and create volatility rather than relief.
Some industry groups and civil society organisations have urged caution, saying the government should ensure refineries are fully operational before imposing extra costs.
Organised labour and opposition groups have also voiced strong resistance, especially toward the broader fuel surcharge, framing it as an additional burden on citizens already dealing with inflation and economic hardship.
Government rationale and broader economic goals
From the government’s perspective, these levies are part of a broader strategy to modernise the Nigerian economy.
Beyond raising revenue, officials argue that encouraging local refining will help stabilise supply, make energy markets more resilient, and reduce dependence on fuel importation.
According to a report by Reuters, the shift also ties into Nigeria’s wider fiscal planning.
In the recently proposed 2026 federal budget, the government outlined measures to manage a projected budget deficit and strengthen economic fundamentals, where oil and related taxes remain central to revenue forecasting.
Balance between reform and burden
As Nigeria heads into 2026, the proposed fuel levies reflect a deeper transformation of the country’s petroleum sector and fiscal policy.
While the 15 per cent import duty aims to support local refining and the 5 per cent surcharge could enhance revenue for infrastructure, the success of these reforms depends on careful implementation and timing.
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If executed without adequate safeguards, the combined effect of these taxes could intensify economic hardship for citizens.
That makes transparent planning, clear communication, and readiness in domestic refining essential to ensure the levies deliver long-term benefits rather than short-term pain.
Dangote Refinery resumes free petrol delivery
Legit.ng earlier reported that Dangote Petroleum Refinery has announced the resumption of its free direct delivery of Premium Motor Spirit to retail outlets across Nigeria, offering a new gantry price of ₦699 per litre.
The move marks a renewed push by the refinery to deepen its presence in the downstream market and ease persistent supply and pricing pressures in the fuel retail segment.
The refinery said the initiative will see petrol delivered directly to registered filling stations nationwide at no additional logistics cost, a development expected to significantly reduce distribution bottlenecks and lower operating expenses for marketers.
Source: Legit.ng
