Petrol Prices to Rise as FG Enforces 0.5% on Fuel Dealers Nationwide
- Nigeria enforces a new 0.5% levy on wholesale petroleum prices amidst rising fuel costs
- Industry stakeholders warn of looming petrol price hikes for consumers due to increased levy obligations
- Failure to comply with new regulations could lead to penalties or shutdowns for fuel suppliers
Petrol prices across Nigeria may be heading for another round of increases as the Federal Government begins strict enforcement of a 0.5% levy on the wholesale price of petroleum products and natural gas.
The move, embedded in the newly released Midstream and Downstream Petroleum Operations Regulations, 2025, signals tougher regulatory control over the downstream sector.
Source: Getty Images
Industry watchers warn that although the levy targets wholesale transactions, the cost is likely to trickle down to consumers already strained by rising fuel and living expenses.
New regulations tighten grip on fuel suppliers
Under the new framework, fuel suppliers are mandated to collect and remit the levy from their wholesale customers at designated wholesale points.
Compliance is no longer optional, as adherence to the levy is now directly tied to licensing and continued operation in Nigeria’s petroleum downstream sector.
The regulation derives its authority from Section 47 of the Petroleum Industry Act, which empowers the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, to maintain an Authority Fund to finance its operations.
What the Petroleum Industry Act says
The PIA clearly states that one of the sources of the Authority Fund shall be “0.5 per cent of the wholesale price of petroleum products sold in Nigeria,” collected from wholesale customers.
While the provision has existed for years, enforcement had remained inconsistent, leading to uncertainty across the industry.
That uncertainty ended with the publication of the 2025 operations regulations, which clearly assign the responsibility of collection and remittance to suppliers.
Industry pushback and earlier disputes
In December 2024, fuel traders openly challenged the NMDPRA over who should collect the levy.
At a sensitisation meeting in Lagos, industry players argued that the PIA did not designate them as tax collectors and warned that the arrangement would increase administrative and financial burdens.
Some stakeholders also questioned whether the levy should be treated like Value Added Tax and charged separately on invoices.
Regulator clarifies levy structure
The NMDPRA rejected these arguments, stressing that the law uses the phrase “0.5 per cent of” rather than “0.5 per cent on,” meaning the levy is embedded within the wholesale price, not an add-on charge.
To eliminate confusion, the regulator explicitly stated in the new regulations that suppliers must collect the levy from wholesale customers for both imported and locally refined petroleum products sold in Nigeria.
Two levies, one per cent total cost
Beyond the Authority Fund levy, operators are also required to remit another 0.5 percent of the wholesale price to the Midstream and Downstream Gas Infrastructure Fund.
This brings the total levy obligation on wholesale petroleum transactions to one percent.
The regulator confirmed that both levies form part of the wholesale price and are payable immediately upon sale.
Strict reporting and remittance rules
Suppliers are required to remit the levies within 21 days after the month of sale.
They must also include the charges in purchase agreements, invoices, receipts, and all transaction documents.
In addition, suppliers must submit monthly reports detailing volumes sold, prices, wholesale customers, and supporting transaction documents.
Upon verification of payments, the NMDPRA will issue receipts to suppliers, who must then share them with wholesale customers.
Sanctions loom for defaulters
The NMDPRA warned that failure to comply will attract stiff penalties. Defaulting suppliers will pay an administrative penalty of 10 per cent of the unpaid levy for each month of non-payment.
In more severe cases, the regulator may suspend operating licences or shut down facilities until all outstanding levies and penalties are settled.
What this means for pump prices
Although the levy is imposed at the wholesale level, analysts caution that fuel marketers are likely to pass the additional costs down the supply chain.
This raises fears that Nigerians could soon face higher petrol pump prices, adding fresh pressure to households and businesses already grappling with elevated energy costs.
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"This is stress at the pumps," says Osas Igho, a financial expert.
"Nigerians should not be burdened with anymore levy, not on petroleum products," he said.
"Already, fuel subsidy removal two years ago drilled holes in Nigerians' pockets that have yet to be filled. Then came the controversial tax laws. This is too much for Nigerians," he said.
Private depots announce new fuel prices nationwide
Legit.ng earlier reported once again, petrol prices in Nigeria are on the rise, this time at private depots, as traders adjust rates.
Data shows that petrol prices at several depots nationwide have increased their petrol prices above N800.
Market operators say the repricing reflects a shift from spot-driven pricing to anticipatory risk valuation.
Source: Legit.ng
