Nigerians are bracing for a significant financial impact as the federal government unveils a dual-pronged taxation strategy on petroleum products, set to commence in 2026. The policy introduces a substantial levy on imported fuel alongside a broader surcharge, raising alarms about the potential to further strain already tight household budgets across the nation.
The Twin Tax Proposals: A Detailed Look
In a major fiscal shift, the administration of President Bola Tinubu has approved two key measures targeting the cost of petrol and diesel. The first and more specific is a 15% ad valorem import duty on these fuels. This tariff, calculated on the cost, insurance, and freight (CIF) value of imported consignments, received presidential approval in late 2025.
Its primary stated goal is to shield and stimulate Nigeria's domestic refining industry. By making imported fuel more expensive, the government aims to make locally refined products from facilities like the massive Dangote Petroleum Refinery more competitive. This move is designed to reduce the country's long-standing dependence on foreign imports and stabilize the energy sector.
However, implementation has been deferred until early 2026 to allow more time for domestic refineries to ramp up production and adequately supply the market.
A Broader Surcharge and Mounting Public Concern
Separately, the revised Tax Administration Act 2025 embeds a broader 5% surcharge on petrol, diesel, and other fossil fuels. This levy is intended to widen the government's revenue base, with projections suggesting it could generate an estimated N796 billion annually from petrol sales alone, funds earmarked for infrastructure projects like road maintenance.
Despite its inclusion in the law, government officials have clarified that there is no immediate plan to enforce this 5% charge, noting that a formal commencement order has not been issued. They stress that this provision existed in prior legislation and should not be assumed to automatically take effect on January 1, 2026.
Public reaction has been swift and critical. Social media commentator Mary Efombruh voiced a common sentiment, stating, "There are about four taxes on petroleum products alone and that is too much for Nigerians." The fear is that these layers of taxation will directly translate to higher pump prices.
Economic Ripples and the Cost of Living Crisis
The potential consequences of these policies are severe for the average Nigerian. Industry marketers have warned that the 15% import duty could push the retail price of petrol above the N1,000 per litre mark, a devastating increase for citizens still grappling with the aftermath of subsidy removal and rampant inflation.
Critics point to a crucial paradox: Nigeria's local refining capacity is not yet robust enough to fully meet national demand. Imposing taxes on imports before domestic supply is assured risks creating supply shortages and price volatility instead of the intended stability.
Organised labour and opposition groups have strongly resisted the measures, particularly the 5% surcharge, viewing them as an additional unbearable burden. The government, however, frames these levies as essential components of a broader economic reform agenda aimed at strengthening revenue, securing energy independence, and funding critical infrastructure.
As the nation approaches 2026, the success of these controversial fuel taxes will hinge on transparent communication, the demonstrable operational readiness of domestic refineries, and a careful balancing act between long-term fiscal reform and immediate public welfare.
