ActionAid Nigeria has called on the Federal Government to suspend the proposed 5% surcharge on fossil fuel transactions, warning that the policy could exacerbate economic hardship for millions of Nigerians, particularly the poor and vulnerable.
In a statement issued Thursday, the Country Director of ActionAid Nigeria (AAN), Dr. Andrew Mamedu, expressed concern over the surcharge contained in Section 158 of the newly gazetted Nigeria Tax Act. While acknowledging the government’s push for innovative revenue sources and greener energy, Mamedu warned the policy risks deepening inequality and placing additional strain on small businesses and low-income households.
“The removal of fuel subsidy in 2023 and the naira float triggered significant inflation,” Mamedu said. “Nigerians have yet to recover from that shock. Introducing a 5% surcharge by 2026 could worsen the situation, especially for women, youth, smallholder farmers, and informal sector workers.”
He noted that while the law exempts clean fuels like LPG, kerosene, and CNG, most Nigerians and SMEs still depend heavily on petrol and diesel due to unreliable power supply and limited access to cleaner alternatives.
“A surcharge will inevitably raise pump prices, increase transportation costs, and push up the cost of goods and services across all sectors, from food and education to healthcare and housing,” he said.
ActionAid further criticised the lack of transparency around how revenue from the surcharge would be managed, drawing parallels to past failed initiatives like the Petroleum Trust Fund. Mamedu warned that without clear accountability mechanisms, the surcharge could become another tool for corruption.
“In countries where such levies exist, governments provide viable alternatives. Nigeria lacks affordable, accessible clean energy options and efficient public transport systems. Imposing this surcharge without fixing these gaps is unjust and disconnected from reality,” he said.
Mamedu also flagged the potential political fallout, noting the policy’s unpopularity ahead of an election cycle and its likely contribution to public discontent.
While reaffirming support for energy transition goals, ActionAid insisted such moves must be preceded by major investments in infrastructure, including expanded CNG filling stations, solar grids, and off-grid renewable systems.
The organisation urged the government to:
-
Immediately suspend the planned 5% surcharge;
-
Ensure wide consultation with civil society, small business owners, informal workers, and other stakeholders before introducing new fiscal measures;
-
Establish a transparent, citizen-led oversight mechanism if the surcharge is implemented in future;
-
Prioritise investment in affordable clean energy alternatives before penalising traditional fuel use.
“A just energy transition requires coherence,” the statement added. “The government cannot simultaneously penalise fossil fuel use while continuing to invest in fossil fuel infrastructure. Mixed signals undermine public trust and Nigeria’s development goals.”
ActionAid concluded by urging the government to stabilise the economy at the grassroots level before introducing new taxes, ensuring that ordinary Nigerians first benefit from any macroeconomic recovery.
