Nigeria’s much-discussed 5% fuel surcharge isn’t a brand-new tax. It’s an existing road-funding charge that the government is updating and restating in law to make it more effective.

Officials have explained that the 5% surcharge has existed since the FERMA (Amendment) Act, 2007. The 2025 tax reforms restate and harmonise it rather than create a new charge. The purpose is to provide a dedicated, stable fund for road maintenance and transport infrastructure, separate from the general budget.

What’s exempt (households are shielded)

The surcharge does not apply to several household and transition fuels: kerosene, LPG (cooking gas), CNG, and clean/renewable energy products. This design aims to protect household energy costs and support the shift to cleaner transport fuels.

Even with the new tax laws in place, the levy only begins when the Minister of Finance issues a formal order published in the Official Gazette. Until that order is made, there is no automatic start date.

Under the FERMA framework, collections are intended to be channelled into road maintenance at federal and state levels. The policy goal is to create predictable, ring-fenced cash flow for highways, bridges, and safety upgrades.

The government’s argument is that a dedicated levy can cut travel time, reduce accidents and vehicle wear, and lower logistics costs over time by keeping roads in better condition, benefits that can offset part of the price impact. Similar user-funding models are common globally.

What businesses and commuters should watch

• The Gazette order: This is the on/off switch. No order, no levy.
• Implementation playbook: Rollout pace, collection mechanics, and any phasing by product will shape short-term price effects. Exemptions remain crucial.
• Transparency: Public reporting on collections, project lists, and audits will decide whether trust builds—or erodes. The whole premise is a dedicated fund.