The Presidential Fiscal Policy and Tax Reforms Committee has clarified that the proposed 5% fuel surcharge under Nigeria’s new tax laws will not apply to several household energy products.
In a statement of Frequently Asked Questions (FAQs) released on Saturday via X (formerly Twitter), committee chairman Taiwo Oyedele explained that household kerosene, cooking gas (LPG), compressed natural gas (CNG), and clean or renewable energy products are exempt from the levy.
The clarification followed growing concerns that the surcharge could worsen the cost-of-living crisis for Nigerians.
“No. Several energy products used by households are exempt. This includes household kerosene, cooking gas (LPG), and compressed natural gas (CNG). Clean and renewable energy products are also excluded to align with Nigeria’s energy transition agenda,” the committee said.
The committee emphasized that the surcharge will not automatically take effect when the new tax laws commence in January 2026.
“It will only commence when the Minister of Finance issues an order published in the Official Gazette as stated under Chapter 7 of the Nigeria Tax Act, 2025. This safeguard ensures careful consideration of timing and economic conditions before implementation,” the committee said.
The committee explained that although savings from petrol subsidy removal can support road projects, the funds are not enough to cover Nigeria’s huge and recurring infrastructure needs alongside other fiscal obligations.
The fiscal committee added that the reform does not contradict the administration’s promise of reducing taxes, noting that multiple charges, such as VAT on fuel, excise tax on telecoms, and the cybersecurity levy, have already been removed or suspended.
On its abolition, the tax reforms committee said the surcharge cannot be abolished because it was designed as a dedicated fund for road infrastructure and maintenance.
“If implemented effectively, it will provide safer travel conditions, reduce travel time and cost, lower logistics costs and vehicle maintenance expenses, which will benefit the wider economy,” the committee said.
“This practice is virtually universal with over 150 countries imposing various charges ranging between 20% to 80% of fuel products to guarantee regular investment in road infrastructure,” the committee added.
President Bola Tinubu signed into law four tax reform bills on key areas of Nigeria’s fiscal and revenue framework in June.
The tax bills generated significant public debate and skepticism across various groups and regions in the country. In response, extensive consultations were held to incorporate diverse opinions into the legislative process.