Picture this scenario: It’s just after dawn at a filling station. A tired-looking commercial motorcyclist counts his crumpled notes carefully before handing them over. But the fuel attendant shakes his head gently and tells him the money will no longer buy what it used to. The rider forces a smile, but his eyes reveal the harsh reality that fuel has become costlier again by about N45 per litre.
You may think this scenario only applies to the bike man, who will inevitably pass the extra cost to his passengers, including probably you. But this analysis will show how President Bola Tinubu’s new fuel tax policy affects everyone at a much larger scale.
According to the tax law, which President Tinubu signed on June 26, 2025, a five percent fuel tax will begin on a date yet to be announced. The policy targets fossil fuel products provided or produced in Nigeria.
Fossil fuel products include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas (CNG) derived from processing coal, petroleum, and natural gas. However, clean or renewable energy products are exempted, along with household kerosene, cooking gas, and CNG.
The law states that the surcharge will be imposed on all chargeable fossil fuel products and calculated based on retail price. It specifies that charges apply to “the supply, sale, or payment, whichever occurs first” and that “surcharge shall be computed based on the retail price of all chargeable fossil fuel products.”
Government’s Potential Earnings
Using current fuel consumption data, analysis shows the government could earn more than N1 trillion annually through this policy. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reports show Nigerians consume Premium Motor Spirit (PMS) most, followed by diesel, then aviation fuel.
NMDPRA’s 2024 data reveals that if this tax had been applied last year, it would have generated N796 billion from petrol alone, excluding diesel and aviation fuel. Nigerians consumed 18.75 billion litres of petrol in 2024, translating to about N15.93 trillion using the average price of N850 per litre. Five percent of this amount equals N796 billion in potential tax revenue.
Once implemented, additional revenue from diesel and aviation fuel will push total earnings significantly higher.
Real Impact on Ordinary Nigerians
Small Business Owners and Traders
In Kano, a commercial motorcyclist spending N25,000 weekly on fuel will now need N26,000 to cover the same distance. The extra N1,000 weekly adds up to N52,000 annually, money that could have gone to food, rent, or school fees.
Market women in Ibadan who spend N10,000 on petrol for small generators will pay N10,500 instead. By year’s end, the additional N500 per refill accumulates to thousands that could have restocked stalls or covered children’s school expenses.
Long-distance traders in Onitsha face heavier burdens. A bulk purchase of N25,000 becomes N26,250, directly cutting into profits and making business reinvestment more difficult.
Civil Servants and Workers
A teacher in Ilorin budgeting N50,000 monthly for transport and family needs will see that figure rise by N2,500. Over twelve months, that’s N30,000 lost, equivalent to school uniforms, food provisions, or partial tuition payments.
Artisans and Small-Scale Entrepreneurs
Welders in Port Harcourt running small generators for work will feel the squeeze when N10,000 refills become N10,500. This gradually eats into already unpredictable earnings.
Barbers in Benin City, depending on steady fuel for clippers and lighting, will watch their N20,000 monthly fuel budget climb by N1,000, reducing already slim profit margins.
Students
University undergraduates in Zaria spending N25,000 monthly on fuel for cars or generators will need N26,250 instead. The N1,250 difference each semester could have purchased textbooks or covered other academic expenses.
Car Owners
The impact on vehicle owners is substantial. A civil engineer in Lagos filling his SUV with N40,000 worth of petrol twice weekly will now pay N42,000 each time. Over a year, the extra N8,000 monthly totals nearly N100,000, money that could cover routine servicing or insurance renewals.
Even owners of smaller cars typically spending N15,000 per refill, must add N750 each time. Across multiple monthly stops, this quietly drains household budgets.
Air Travelers
Airlines heavily dependent on aviation fuel will pass costs to passengers. A Lagos-to-Abuja ticket currently priced between N200,000 and N280,000 could rise by N10,000 to N14,000 once operators adjust to the five percent surcharge.
For frequent business travelers and families who fly regularly, increases may seem modest initially, but create huge cumulative impact over time.
Government’s Justification
Presidential Committee on Fiscal Policy and Tax Reforms Chairman Taiwo Oyedele promises the fuel tax will help improve tax infrastructure and reduce transport and logistics costs.
“The intention is to earmark and dedicate the revenue from this tax into providing transport infrastructure that can reduce the cost of transporting items, logistics and overall bring down inflation for the Nigerian people,” he stated.
The Broader Picture
This policy arrives during a particularly difficult economic period marked by fuel subsidy removal and other painful adjustments. For many Nigerians already struggling with reduced purchasing power, this additional burden feels overwhelming.
From okada riders to traders, teachers to artisans, barbers to students, the new fuel tax represents more than numbers on paper. It’s a daily battle for survival where every fuel station visit will remind citizens that life costs more while incomes remain unchanged.
The question remains whether Nigerians will trust another government promise about using tax revenue for their benefit, given the track record of previous commitments.
Seunmanuel Faleye is a brand and communications strategist. He is a covert writer and an overt creative head. He publishes Apple’s Bite International Magazine.
