5% Fuel Surcharge to Fund Road Infrastructure, Says Oyedele
By Patience Ikpeme
The federal government’s 5% surcharge on fossil fuels is intended to create a dedicated funding source for road infrastructure and maintenance.
Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, provided this explanation on Saturday, noting that the measure is designed to improve travel conditions and boost the wider economy.
According to Oyedele, the surcharge is part of a broader strategy to ensure safer travel, reduce travel time and cost, and lower logistics and vehicle maintenance expenses.
“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,” he said.
Oyedele explained that while savings from the fuel subsidy removal provide some funding, they are “insufficient to meet Nigeria’s huge and recurring road infrastructure needs.”
He said a dedicated fund ensures a “reliable and predictable financing for roads, complementing the budget and ensuring roads are not left underfunded.” He also mentioned that over 150 countries worldwide have similar charges, ranging from 20% to 80% of fuel prices, to guarantee regular investment in road infrastructure.
Oyedele clarified that the 5% surcharge is not a new tax but a provision that already exists in the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act). He explained that it was incorporated into the new Tax Act to provide a forward-looking legal framework for Nigeria.
“The surcharge is not new. It already exists under the Federal Roads Maintenance Agency (Amendment) Act, 2007 (FERMA Act),” Oyedele stated. “The new Tax Act only restates it for harmonisation and transparency. Hence, it was not part of the original tax reform bills submitted by the president to the National Assembly.”
He also assured the public that the surcharge will not take effect automatically. It will only begin after the Minister of Finance issues an order, which must be published in the Official Gazette, as stated in Chapter 7 of the Nigeria Tax Act, 2025. “This safeguard ensures careful consideration of timing and economic conditions before implementation,” he said.
Oyedele added that several products used by households are exempt from the surcharge, including household kerosene, cooking gas (LPG), and compressed natural gas (CNG). He said this exclusion of clean and renewable energy products is in line with Nigeria’s energy transition agenda.
