FG says 5% fuel surcharge, not to strain Nigerians

Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele

According to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, he said the proposed fuel surcharge is meant to generate a dedicated fund for Nigeria’s deteriorating roads, not to add extra challenge to households.

Oyedele acknowledged public worries that recent tax reforms could worsen inflation but argued that improved road infrastructure is essential to lowering the cost of moving goods and people.

He clarified this while speaking on Channels Television’s Morning Brief on Tuesday.

Reports says that 5% fuel surcharge is one of the taxes under the recently enacted Nigeria Tax Act, 2025, and is proposed to take effect in January 2026.

However, it has sparked anxiety about potential inflation. The Trade Union Congress has threatened to call a nationwide strike within two weeks if the Federal government fails to scrap the tax.

“I know everybody is concerned about the impact on inflation, I’m concerned myself,” he admitted.

“But we also know that around the world, road infrastructure is very important. Nigeria has about 200,000 kilometres of road, and only about 60,000 are okay. This is the major reason why transporting anything in Nigeria, whether goods or people, is costly and unsafe.”

Oyedele linked the poor state of roads directly to inflation, noting a yawning gap between rural and urban food prices.

“If you look at the rural inflation of food and compare it with the inflation of food in urban centres, sometimes the difference is as high as 5%. In most countries, that gap would be under 1%. The majority of the issues are to do with the state of the road and the multiple taxes being collected whenever you move goods around.”

He dispelled the notion that the surcharge is unnecessary after the subsidy was removed, stating that the tax was “introduced in 2007, and it wasn’t implemented because government was subsidising fuel.”

While he said the removal of fuel subsidies has opened fiscal space, the Chairman argued that subsidy revenues alone are insufficient to close Nigeria’s infrastructure gap.

“Even with the removal of fuel subsidy… the huge gap we still have in terms of infrastructural development is not going to be addressed by those revenues alone,” he said.

Oyedele said the surcharge would be implemented with care to avoid stoking inflation or hurting vulnerable citizens.

“Some of the strategies for this surcharge could be to time it at a period when there is an appreciation in the value of the currency. The naira gained 1% yesterday alone; if the naira gains about 5% and you put in this tax, nobody will notice the changes in the pump price. Or if the price of crude oil in the international market drops by about 5%, you can also have it at that point,” he explained.

Oyedele stressed that the funds from the surcharge would be ring-fenced and dedicated to fixing Nigeria’s failing roads.

“Then we can all focus this money to ensure that it is dedicated to fixing roads that can make all our lives better and bring down the prices of items,” he said.

He also pointed to the success of the Road Infrastructure Tax Credit Scheme, which allows private companies to invest directly in road construction in exchange for tax credits.

“We have the road infrastructure tax credit that is done with the private sector; we can see the advantage. People who live in Apapa cannot make any complaints at all, because based on that policy, the likes of Dangote, NLNG, Lafarge, and MTN are fixing roads,” he said.

“There’s nothing that says we can’t have a similar arrangement for the private sector to be involved in ensuring that this money is efficiently utilised,” Oyedele added.

The tax reform chief urged Nigerians to keep an open mind, stressing that if, after implementation, the policy does not serve its purpose, there are mechanisms to reverse it.

“I think people need to look back and see how these things can work for our country. And if it can’t work, then the process is there for the National Assembly to remove it from the law,” he said.