“It’s Implemented in Over 150 Countries” — FG Defends Fuel Surcharge

The Federal Government has defended the proposed 5 percent surcharge on fossil fuel products, insisting it is not a new levy but a policy framework to ensure steady funding for road construction and maintenance across the country.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, explained that the surcharge aligns with global practice, noting that more than 150 countries currently impose similar charges at rates between 20 and 80 percent. He stressed that Nigeria’s measure, if implemented, would be modest and targeted at addressing long-standing infrastructure gaps.

Oyedele said road infrastructure has suffered decades of underfunding, leading to unsafe travel conditions, delays, high logistics costs and increased vehicle maintenance burdens on citizens and businesses. He added that relying solely on savings from petrol subsidy removal would not be enough to meet the country’s recurring road infrastructure needs.

The surcharge, he clarified, is provided for under the Federal Roads Maintenance Agency Amendment Act of 2007 and was restated in the Nigeria Tax Act, 2025, for harmonisation, transparency and legal clarity. He emphasised that it will not take effect automatically but only after the Minister of Finance issues an order published in the Official Gazette, ensuring careful consideration of economic conditions before implementation.

Addressing concerns about tax burdens, Oyedele pointed out that several charges had already been removed or suspended, including value added tax on fuel, excise duty on telecommunications and the cybersecurity levy. He said the reforms were designed to simplify Nigeria’s tax system, reduce duplication and focus on sustainable financing.

According to him, creating a dedicated fund for road projects would guarantee reliability and predictability in financing, preventing critical infrastructure from being underfunded. He added that incorporating the surcharge into the broader tax framework was aimed at building a coherent, forward-looking structure to support road maintenance and tackle emerging challenges such as climate-related impacts on transport infrastructure.

Oyedele described the measure as neither new nor immediate but as a transparent mechanism to prepare for sustainable funding of roads and other critical projects when the timing is deemed appropriate.