🛣️ FG Proposes 5% Fuel Surcharge to Fund Road Infrastructure
The Federal Government has clarified the proposed five percent surcharge on fossil fuels, aimed at creating a dedicated fund for road infrastructure and maintenance.
Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, explained the measure on a WhatsApp platform, highlighting its potential to improve travel safety, reduce logistics costs, and enhance economic efficiency.
“If implemented effectively, it will provide safer travel conditions, reduce travel time and cost, and lower vehicle maintenance expenses, benefiting the wider economy,” Oyedele said.
🌍 Global Context
Nigeria’s approach aligns with international practice: over 150 countries levy charges on fuel products between 20–80% to guarantee regular road infrastructure investment.
“Subsidy savings alone cannot meet Nigeria’s huge road needs. A dedicated fund ensures reliable financing and complements the national budget,” Oyedele added.
📌 Implementation and Timing
- Not a new surcharge – already exists under the FERMA Act 2007.
- Harmonisation for transparency – new Tax Act clarifies its legal framework.
- Ministerial approval needed – surcharge will commence only after the Finance Minister issues an order in the Official Gazette.
“This safeguard ensures careful planning before the surcharge is applied,” Oyedele said.
💡 Impact on Households and Businesses
The surcharge will not affect household energy products, such as:
- Kerosene
- Cooking gas (LPG)
- Compressed natural gas (CNG)
- Clean and renewable energy sources
It also aligns with Nigeria’s tax harmonisation drive, which has suspended or removed several levies impacting households and small businesses, including:
- VAT on fuel
- Excise tax on telecom services
- Proposed cybersecurity levy
“Harmonising earmarked taxes reduces duplication and ensures a more efficient system,” Oyedele said.
✅ Long-Term Goals
The surcharge aims to sustainably finance road infrastructure, balance public finance demands, and support Nigeria’s climate commitments.
“This is about creating a clear and effective framework for sustainable road financing in the future,” Oyedele concluded.
| Fact | Detail |
|---|---|
| Surcharge | 5% on fossil fuels |
| Purpose | Dedicated fund for road maintenance |
| Legal Basis | FERMA Act 2007, harmonised in 2025 Tax Act |
| Implementation | Requires Minister of Finance order |
| Exemptions | Household kerosene, LPG, CNG, renewable energy |