NOA says 5% fuel tax will cut travel costs, boost road funding

The National Orientation Agency (NOA) says the reintroduction of a 5 percent fuel surcharge on petroleum products will go a long way to benefit Nigerians.

A surcharge is an additional charge, fee, or tax added to the cost of a product or service beyond the initially quoted price.

Petroleum products include petrol, diesel, and compressed natural gas (CNG).

In a post on X on Tuesday, NOA said the introduction of a 5 percent fuel surcharge aligns with a global trend already in place in over 150 countries.

According to the agency, charges ranging from 20 percent to 80 percent are imposed on fuel products to create a pool of funds for continuous investment in road infrastructure.

“Under Nigeria’s Tax Administration Act, 2025, signed by President Bola Tinubu, the surcharge is designed to deliver the following benefits,” NOA said.

“Dedicated funding for road infrastructure and maintenance. It provides a reliable and predictable stream of revenue to maintain and repair Nigeria’s roads, ensuring they are not perpetually underfunded.

“Reduced travel costs. Better roads reduce delays, vehicle wear, and logistics expenses.

“Safer roads cut down accidents and improve rural access.

“Fiscal sustainability, boosts non-oil revenue, making infrastructure funding more sustainable.

“Harmonises tax laws, eliminating overlaps and loopholes.

“Energy protection, it exempts kerosene, LPG, CNG, and renewables to shield households and support energy transition goals.”

On July 25, TheCable reported that the new tax law has imposed a 5 percent surcharge on chargeable petroleum products.

According to the Tax Act, a fossil fuel product becomes chargeable upon the earliest occurrence of supply, sale, or payment.

The tax levy has, however, raised concerns that the provision could trigger further hardship on Nigerians.

However,  Wale Edun, minister of finance and coordinating minister of the economy, said the federal government has no immediate plans to implement the 5 percent fuel surcharge anytime soon.