5% Fossil Fuel Tax Set to Kick In January 2026 in Nigeria
5% Fossil Fuel Tax Set to Kick In January 2026 in Nigeria
Starting January 2026, Nigerians will be required to pay an additional 5% on every purchase of fossil fuels at the point of payment, following the implementation of a new tax law by the federal government. This law mandates a 5% surcharge on all fossil fuel products supplied or produced within Nigeria.
The legislation specifies that the tax will be collected immediately during the transaction, effectively making it a point-of-sale levy. However, certain energy sources are exempted from this surcharge, including clean or renewable energy, household kerosene, cooking gas, and compressed natural gas (CNG).
If implemented efficiently, this policy is expected to curb the growth of greenhouse gas emissions, support Nigeria’s climate change commitments, and generate funds that could be directed toward sustainable development initiatives.
Despite its potential environmental benefits, energy policy experts have raised concerns about the uniform 5% rate. They argue that it fails to account for socio-economic disparities in Nigeria, where millions of citizens and small businesses depend on petrol-powered generators for electricity. Critics suggest that the policy could disproportionately impact low-income households and small enterprises that rely heavily on fossil fuels for daily operations.
