By Obinna Uballa
Nigerians may be in for fresh economic hardship as the Federal Government announced a new 5 percent tax on all refined fossil fuel sales, including petrol, diesel, and aviation fuel, with effect from January 2026.
The levy, introduced under the Harmonized Tax Act recently signed by President Bola Tinubu, will be collected at the point of sale. This means motorists will pay an extra N500 for every N10,000 worth of fuel purchased, a move authorities say is aimed at boosting revenue and encouraging cleaner energy adoption.
However, the policy has sparked widespread outrage from economic analysts, activists, and political leaders, who warn that the tax will further raise transportation costs, push up food prices, and worsen inflation at a time millions of Nigerians are already struggling with high living costs.
Reacting on his official X handle on Thursday, former Labour Party presidential candidate Peter Obi described the tax as “ill-timed and insensitive”, accusing the Tinubu administration of overburdening citizens despite boasting of meeting revenue targets.
“When will Nigerians truly breathe?” Obi asked. “A timely and relevant question, as a new 5% tax on all refined fossil fuel sales, including petrol and diesel, has just been announced by the Federal Government.”
He questioned why additional taxes were necessary when government revenues had reportedly surged following the removal of fuel subsidies.
“If our revenues are truly ‘excessive’ as claimed, should they not first be used to fund education, healthcare and pull Nigerians out of poverty? Why tax citizens who cannot even breathe anymore?” he added.
Obi also criticised the lack of incentives for cleaner alternatives, pointing out that the price of Compressed Natural Gas (CNG), earlier touted as a cheaper option, has doubled from about N230 to N450 per standard cubic metre despite government promises of subsidies.
Financial analyst Kalu Aja (@FinPlanKaluAja1) blasted the policy as poorly thought out: “Tinubu removed PMS subsidy, generated trillions in new revenues, then imposed a new 5% regressive fossil fuel tax on all citizens that use PMS, aviation fuel and diesel,” he said.
“Exemptions include clean and renewable energy products, kerosene, cooking gas and CNG. But on CNG, the price has gone up as the FGN removed the subsidy.
“If the intent is to change behaviour and have a cleaner environment, why not use the revenues from subsidy removal to subsidise green power sources? Why tax fossil fuels, exempt CNG, then remove the subsidy on CNG?”
Civil society activists have also taken aim at the government. Serah Ibrahim (@TheSerahIbrahim), a prominent voice in the Obedient Movement, wrote: “SUBSIDY IS GONE. REFINERY IS WORKING. Every news from our dear Minister of Petroleum has been a gimmick. Now 5% tax on fuel, diesel and Jet A1.”
Similarly, social media commentator @OurFavOnlineDoc warned Nigerians to brace up: “Have you heard of 5% fuel tax under Harmonized Tax Act of Bola Tinubu??? Starting January 2026, Nigerians will pay an extra 5% tax on every litre of fuel. With fuel already expensive, there is shege coming.”
Officials argue that the levy will support Nigeria’s energy transition goals, curb carbon emissions, and encourage adoption of cleaner fuels. Products such as kerosene, LPG (cooking gas), and CNG are exempted from the tax because they are considered more environmentally friendly, according to the Federal government.
But with the cost of CNG also surging after subsidy removal, critics say the policy will hit ordinary Nigerians the hardest while failing to achieve its stated objectives.
