Business
FG eyes N796bn annually from 5% petrol surcharge
Published
3 weeks agoon

• Consumers decry new fuel tax after subsidy removal as law begins Jan. 2026
The Federal Government may rake in N796bn annually from the introduction of a five per cent surcharge on locally produced and imported petrol, based on its new tax policy slated to take effect from January 1, 2026.
The five per cent surcharge on refined petroleum products is contained in the Nigeria Tax Administration Act, one of four tax reform bills signed into law by President Bola Tinubu on June 26, 2025. Our correspondent obtained a copy of the Act on Wednesday.
However, consumers have opposed the move, stressing that the government had earlier removed fuel subsidies and now plots to impose a five per cent surcharge on fuel, without considering the harsh economic realities nationwide.
This came as oil marketers stated that the five per cent surcharge may further hike the pump prices of refined petroleum products.
The surcharge forms part of government efforts to shore up non-oil revenues and promote fiscal sustainability amid mounting public debt and subsidy-related costs. The policy targets fossil fuel products provided or produced in Nigeria.
Fossil fuel products include petrol, diesel, kerosene, aviation fuel, and Compressed Natural Gas, among others. They are derived from the processing of fossil fuels such as coal, petroleum, and natural gas.
However, items exempted from the new tax are clean or renewable energy products, as well as household kerosene, cooking gas, and Compressed Natural Gas.
Findings by The PUNCH showed that the government would garner about N796bn annually from only petrol once the five per cent surcharge takes effect.
An analysis by our correspondent, using the volume of imported and refined petrol, showed that the government could earn N796bn based on the 2024 estimates of national consumption and refining capacity production data provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
This N796bn is purely for petrol and doesn’t include other fossil fuel derivatives such as diesel and aviation fuel.
A breakdown of data from the NMDPRA shows that the total volume of petrol consumed by Nigerians reached 18.75 billion litres in 2024. NMDPRA, an agency of the Federal Government, is the mid- and downstream regulator of the oil and gas industry.
The 18.75 billion litres of petrol translates to about N15.93tn, using the average price of N850 for a litre of petrol consumed in Nigeria during the review period. Five per cent of N15.93tn represents N796bn, which is the sum that the Federal Government may rake in annually from only petrol once it implements the planned surcharge.
This, therefore, implies that the government’s earnings from the proposed surcharge on fossil fuel products (petrol, diesel, and aviation fuel) would be more than N796bn once the five per cent surcharge policy on refined petroleum products takes effect, after being approved by the Minister of Finance, as stated in the Act.
According to the law, the surcharge will be imposed on all “chargeable fossil fuel products” and will be calculated based on the retail price of the product. The Act stipulates that the surcharge will apply to a “chargeable transaction” such as the supply, sale, or payment for the product, “whichever occurs first”.
The law read in part, “A surcharge is imposed at five per cent on chargeable fossil fuel products provided or produced in Nigeria, and shall be collected at the time a chargeable transaction occurs.
“(1) For the purpose of imposing a surcharge on fossil fuel products, the chargeable transaction shall be the supply, sale, or payment, whichever occurs first. (2) Surcharge shall be computed based on the retail price of all chargeable fossil fuel products.”
The implementation date, however, remains undecided and is now subject to the approval of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. “The minister may, by an Order issued in the Official Gazette, indicate the effective date of commencement of the administration of the surcharge on fossil fuel products under this Chapter,” the Act said.
“The Service shall administer and collect the surcharge every month and may issue regulations for its administration,” a section of the Act reads. A surcharge is an additional fee or tax added to the price of a good or service beyond the base price.
The law tasks the Federal Inland Revenue Service, which will be renamed the Nigeria Revenue Service by 2026, with administering and collecting the surcharge every month. It also empowers the agency to issue further regulations for effective implementation.
It further stated, “The surcharge under this Chapter shall not apply to the following fossil fuel products: (a) clean or renewable energy products; (b) household kerosene; (c) cooking gas; and (d) Compressed Natural Gas.
“(2) For the purpose of this section, ‘clean or renewable energy’ means energy from solar, wind, hydropower, geothermal, or plant and animal waste, which are naturally replenishing, produce little or no environmental pollution or greenhouse gas emissions, and do not deplete over time.”
The Nigeria Tax Act is one of four tax laws signed into law by President Tinubu to overhaul the country’s tax framework. The others include the Joint Revenue Board (Establishment) Law, the Nigeria Revenue Service (Establishment) Act, and the Nigeria Tax Administration Act.
The laws are aimed at enhancing revenue collection efficiency, promoting fiscal transparency, and supporting the implementation of Nigeria’s medium-term revenue strategy.
With rising government borrowing and growing fiscal pressures, the surcharge is expected to form part of new efforts to boost non-oil revenue, though its real impact will depend largely on how and when it is implemented.
Consumers kick
However, marketers, transport workers, farmers, human rights advocates, and civil society groups across Nigeria have raised opposition to the proposed implementation of the five per cent users’ charge on petrol and diesel pump prices.
The National Chairman of the Joint Drivers Welfare Association, Akintade Abiodun, accused the government of using Nigerians as “lab rats” for unpopular economic decisions.
The Association of Nigerian Refineries Petroleum Marketers also raised an alarm recently over the Federal Government’s plan to enforce a five per cent user charge on fuel pump prices through the Federal Roads Maintenance Agency, warning of severe operational and economic consequences for marketers and consumers.
The association’s National Chairman of the Board of Trustees, Usman Ali, disclosed this at a press conference. The association acknowledged the past failures of the subsidy system, which it described as riddled with corruption, inefficiency, and massive fiscal leakages.
It warned that the removal of the subsidy must be matched with robust regulatory frameworks to avoid a resurgence of malpractice in the downstream sector. The association called for digital tracking systems, transparent procurement procedures, and effective enforcement to improve accountability and reduce losses
The association, however, expressed conditional support for the proposed levy, stating that while improving Nigeria’s road infrastructure was necessary, the charge must be implemented with caution and tied to visible and immediate road rehabilitation.
“The powers that be in this country are taking us for a ride. They think we won’t react just because we were quiet the last time they increased fuel. Now they want to add another cost on top of the already expensive pump price. This must be reversed,” he said.
On its part, the Chancellor of the International Society for Social Justice and Human Rights, Jackson Omenazu, chided the government for pursuing policies that are “anti-people.” He warned that growing public frustration could explode if authorities continue to ignore the sufferings of citizens.
Omenazu said, “How can lawmakers sit in the comfort of their offices, after increasing their own allowances, to approve policies that will send poor Nigerians to early graves? What kind of leadership is this?
IPMAN reacts
The Independent Petroleum Marketers Association of Nigeria has warned that the five per cent surcharge on petroleum products may lead to an increase in the pump price of fuel across the country.
The association explained that although the new levy would be factored into the pre-pricing structure by industry players such as refineries and marketers, the financial impact would eventually be transferred to consumers.
National Publicity Secretary of IPMAN, Chief Chinedu Ukadike, who spoke in an interview with The PUNCH on Wednesday, said the development could complicate Nigeria’s already fragile downstream pricing environment.
“The only implication is that industry players like the refineries will add it to their pre-pricing costs, but not post-pricing costs,” Ukadike said. “But indirectly, it would also lead to an increase in the pump price.” He said the association is closely monitoring how the policy will be implemented.
According to him, “Any additional charge on the cost of importation or refining of petroleum products will, by extension, reflect in the final retail price. This is because marketers operate on thin margins and cannot absorb such levies without a ripple effect.”
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Business
Tinubu unveils tax calculator to show impact on incomes
Published
9 minutes agoon
August 22, 2025
President Bola Tinubu on Friday urged Nigerians to try a newly launched Personal Income Tax calculator that estimates how much would be paid under the tax reforms his administration recently signed into law.
In a post on his official X account, the President said the calculator allows citizens to compare their estimated tax under the proposed reforms with current rates, and ensure a clear understanding of the impact on individual incomes.
Tinubu said the reforms, which take effect from January 2026, are intended to establish a fair tax system, one that never punishes poverty or weighs down the most vulnerable.
He said, “A fair tax system must never punish poverty or weigh down the most vulnerable.
“With the new tax laws I recently signed, taking effect from January 2026, we have lifted this burden and created a path of equity, fairness, and true redistribution in our economy.
“A Personal Income Tax Calculator has been developed. It allows you to check your estimated tax under the new laws against what you currently pay.
“It shows clearly how these reforms protect low-income earners, ensure progressivity, and simplify compliance in order to deliver a transparent system that works for all.”
Tinubu stated further, “Together, we are renewing hope in the Nigeria of our dreams.
“Take a bet on our country. Bet on Nigeria to work for you, your family, and your community.”
The Personal Income Tax calculator can be accessed on https://fiscalreforms.ng/index.php/pit-calculator/.
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Business
FCT: Water supply project will create 1,600 jobs – Wike
Published
2 days agoon
August 20, 2025
The Minister of the Federal Capital Territory, FCT, Nyesom Wike, has spoken of plans to create over 1,600 direct and indirect jobs for youths of the capital city.
Wike disclosed that the jobs will be created through the provision of potable water in all the area councils of the FCT by President Bola Tinubu’s administration.
He made the disclosure during the flag-off of the construction and expansion of water supply to FCT satellite towns, Lot 1; Bwari Township in Bwari Area Council, on Wednesday.
The minister said, “Remember in 2023 when we were appointed, we had stakeholders meeting with the six area councils and in one of such meetings I did say that the president is desirous in providing portable clean water to the Satellite towns.
“When he made that statement, of course, people will always see it as being politics but I remind you that one thing you must give to Mr President is that when he makes his promises, he always fulfills.
“Today, we are in Bwari and tomorrow we will be in Karu. In essence, we are doing two areas councils together.The President has mandated that yes the contract for this ought to be 18 months but we discussed with the contractors and pleaded with them that by the third year anniversary of Mr president we will be able to commission these projects.
“And when the contractors assured us that they can if funds are made available, Mr president immediately approved 50 percent of the total contract sum to CGC Nigeria and I hope that by the grace of God knowing the commitment of this company in which ever job that is given to them they will deliver on time.
“What this tells us is that we are not concentrating development only in the city area, we are also carrying development to the area councils. By the time we finish in Bwari and Karu, the next year’s budget will be to Kuje, Kwali and by the grace of God in 2027 we would have taken over Gwagwalada and Abaji.
“By the time Mr president’s four years expires, there will be clean, treated water. This will provide jobs for our teeming youths, create about 1600 direct and indirect employment.
“This is the first time a government is saying you too deserve to have portable, clean water because water is life. It’s not just saying it but implementing it.”
Wike also assured that projects embarked on by his administration will not be abandoned.
He added: “Be assured that this will not be water you will say is an abandoned project, we don’t abandon projects. We start and we complete it.
“I thank God you have reminded us that agreement is agreement, we have agreed that we are going to do water and we are bringing water, when I come back to say we have performed you too will perform.”
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Procurement delays, worsening insecurity, and rising costs of goods and services have emerged as major reasons several state governments failed to meet their capital expenditure targets in the first six months of 2025.
Findings from states’ second-quarter Budget Implementation Reports revealed that capital spending across many states remained significantly below expectations, despite ambitious budgetary provisions designed to accelerate infrastructure growth.
A fresh breakdown of state government expenditure between January and June 2025 showed that 31 states collectively disbursed N2.75tn for capital projects.
However, this figure represents only a fraction of the N17.51tn they had budgeted for capital expenditure in the 2025 fiscal year.
The budget performance of those figures is about 15.7 per cent, meaning the 31 states achieved less than one-fifth of their capital expenditure target in the first half of 2025.
The underperformance has delayed critical infrastructure projects and deepened hardship for citizens who rely on improved roads, schools, hospitals, and water systems.
This is also coming on the heels of the fact that the states earmarked N11.34tn to finance capital projects but eventually recorded a funding gap of N3.98tn in 2024, as revenue shortfalls, rising wage bills, and heavy debt servicing weakened their fiscal capacity.
This year’s half-year performance suggests that the same structural challenges remain unresolved.
According to experts, capital spending is the fund disbursed by the state on long-term investments aimed at improving infrastructure, services, or the economy.
These expenditures are typically used for projects that have a lasting benefit, such as building roads, bridges, schools, hospitals, public transport systems, and other essential infrastructure to foster economic growth, improve quality of life, and ensure better public services for citizens.
The clamour for improved infrastructure has grown louder in the aftermath of the fuel subsidy removal and foreign exchange devaluation, which have significantly boosted revenue inflows to the federal, state, and local governments, raising public expectations for visible development outcomes.
Last month, President Bola Tinubu urged state governors to prioritise Nigerians’ welfare by investing more in their future, putting more money into rural electrification, agricultural mechanisation, poverty eradication, and improved infrastructure investment.
Tinubu implored the governors to do more to positively impact the lives of Nigerians in the grassroots, saying, “I want to appeal to you; let us change the story of our people in the rural areas.
“The economy is working. We are on the path of recovery, but we need to stimulate growth in the rural areas. We know the situation in the rural areas, let us collaborate and do what will benefit the people,” he added.
President Tinubu urged state governors to collaborate with the Federal Government to drive economic development in rural areas nationwide. “We have to embrace mechanisation in agriculture, fight insecurity, and improve school enrolment through feeding,” the President said.
Despite the revenue windfall, many states have failed to meet their mandate of delivering key infrastructure for citizens, with governors attributing the shortfall to persistent insecurity, cumbersome procurement processes, and other long-standing challenges.
An analysis of the fiscal performance of each state, utilising data from the Q1 to Q2 budget performance reports obtained from each state’s website, revealed the scale of the challenges.
The breakdown showed sharp contrasts in budget performance across the country, with 31 states collectively spending N2.75tn on capital projects and N2.35tn on recurrent expenditure between January and June 2025.
An analysis of states’ second-quarter Budget Implementation Reports revealed that while some states channelled the bulk of their resources into infrastructure and development projects, others leaned heavily on recurrent costs such as salaries, allowances, and overheads.
Enugu State recorded the highest capital-to-recurrent ratio, with 81.9 per cent of its total expenditure (N99.59bn) going into capital projects, compared to N22.06bn for recuThe 27.1 per cent performance is indeed), Bayelsa (69 per cent), and Kebbi (68 per cent) followed closely, ranking among the most capital-focused states in the first half of the year.
Imo State led the pack on infrastructure development with N188.1bn channelled into capital expenditure, compared to just N50.29bn on recurrent. Enugu followed closely, committing N99.59bn to capital projects against N22.06bn for recurrent, making it the most capital-focused state in terms of percentage allocation.
Bayelsa also posted a strong capital bias, spending N238.29bn on capital against N107.26bn recurrent, while Abia disbursed N133.1bn on capital compared to N39.73bn recurrent. Edo and Akwa Ibom both crossed the N170bn mark in capital expenditure, allocating N179.56bn and N179.76bn respectively.
Other states that leaned more towards capital included Borno (N92.99bn vs N61.59bn recurrent), Gombe (N93.99bn vs N52.25bn), Jigawa (N82.99bn vs N56.63bn), Kebbi (N78.86bn vs N36.81bn) and Zamfara (N51.1bn vs N37.57bn).
At the other extreme, several states recorded higher recurrent spending than capital, raising concerns about long-term development priorities. Kogi was the most recurrent-heavy, spending N133.22bn on recurrent compared to N73.16bn on capital.
Ekiti followed, with N101.1bn on recurrent against N56.1bn capital, while Osun allocated N89.37bn to recurrent and only N57.13bn to capital. Oyo also tilted towards consumption, disbursing N129.06bn recurrent against N110.64bn for capital projects.
Ogun balanced closely, spending N157.15bn on recurrent and N155.64bn on capital. Similarly, Bauchi (N97.29bn recurrent vs N91.69bn capital), Kano (N115.24bn recurrent vs N90.79bn capital), Kwara (N71.59bn recurrent vs N62.68bn capital), Nasarawa (N68.3bn recurrent vs N48.49bn capital), Ondo (N84.37bn recurrent vs N61.88bn capital), Sokoto (N72.18bn recurrent vs N69.01bn capital) and Taraba (N57.88bn recurrent vs N24.17bn capital) all leaned more towards recurrent expenditure.
A few states maintained near parity between the two categories. Kaduna disbursed N108.45bn on capital and N100.31bn recurrent, while Ebonyi’s spending was almost evenly split at N36.89bn capital and N38.38bn recurrent.
The overall capital share of 53.9 per cent across the 31 states indicates that subnationals are still devoting nearly half of their budgets to recurrent obligations, despite revenue windfalls from subsidy removal and foreign exchange reforms.
The poor performance has tangible effects. In Benue, where only N23.32bn was spent on capital projects compared to N44.5bn on recurrent, key roads and agricultural projects have stalled due to insecurity. Similarly, Cross River allocated just N30.53bn for capital against N84.8bn for recurrent, limiting its capacity to address infrastructural deficits in education and healthcare.
Commenting on this, Governor Hyacinth Alia of Benue State blamed the state’s poor performance on widespread insecurity.
“The poor recorded performance is largely due to the overwhelming insecurity challenges faced by the state during this reporting period,” the budget report said.
In June, no fewer than 200 people were killed when gunmen attacked Yelwata community in Guma Local Government Area of Benue State.
Although the state raised its 2025 capital budget by over N100bn to stimulate “aggressive urban and rural infrastructural development,” authorities admitted that implementation, particularly in the second quarter, “was significantly slowed down” as contractors were unable to mobilise.
Jigawa State also struggled, with officials describing capital performance as “below average.”
According to the report, “Procurement plans of most capital-intensive projects of most MDAs primarily target beyond the first quarter, which are to ensure providing adequate time to deal with all the necessary contract procedures. During the second quarter, many of these projects entered the implementation phase, with several undergoing tender approvals and vetting processes.”
The government, however, expressed optimism that performance “will improve significantly by the third quarter.”
Imo State reported capital expenditure performance of just 27.1 per cent as against the expected 50 per cent by mid-year.
“The 27.1 per cent performance is indeed much less than expected, however capital expenditure does not strictly follow that format of equally splitting the total amount across the four quarters,” the government said.
It cited recent funding gap analysis in primary education and health that slowed releases, coupled with insurgency in parts of the state.
“The current spate of insurgency in and around the state has also affected the mobilisation of contractors whose procurement processes have been completed to commence work,” the report noted.
Borno State attributed its weak capital performance to “low capital inflows from budgeted sources and other peculiarities of the state.”
The government disclosed that an amendment was made in the revised 2025 budget “to cater for overspending on both recurrent and capital expenditure in Q1 and Q2.”
In Ebonyi, officials said capital budget utilisation stood at just 11.3 per cent.
“The relatively low performance is primarily attributed to the budget profiling approach, which scheduled the implementation of several large-scale capital projects for the third quarter and beyond,” the report stated.
Authorities added that some expenditures in health and education were not captured in the approved budget.
“To address these issues, the state plans to undertake a budget review in the third quarter to incorporate these expenditures and realign budget provisions to support timely and efficient project execution,” the report added.
In Sokoto State, capital performance stood at 19.7 per cent as of Q2, which government admitted was “below expectations.”
“This is largely due to the procurement process attached to capital projects that takes time as well as slow performance on the part of some contractors,” the budget report said.
They added that the government had set up a Projects Monitoring Committee “to change the trend in subsequent quarters.”
Yobe blamed delays in approvals and soaring costs for its underwhelming execution.
“Delays in the commencement of certain key projects, particularly those that required memo approvals, were primarily due to bureaucratic bottlenecks,” the report stated.
The government, however, noted progress in road, market and flyover projects, but said external factors hurt delivery timelines.
“The rainy season and the general rising costs of goods and services significantly impacted the timelines for project execution,” it said.
Governor Abdullahi Sule of Nasarawa State pointed to front-loading difficulties typical of large infrastructure projects.
“This slow pace reflects the challenge common in infrastructure projects, where initial disbursements are slower as project planning, procurement, and mobilisation processes are finalised,” the government explained.
It admitted overspending in certain areas such as “purchase of motor vehicles, rehabilitation of equipment, and anniversaries/celebrations,” but pledged to correct this in its budget review.
Zamfara said its low capital performance was mainly because “many capital projects were still undergoing procurement processes.”
“Payments for mobilisations commenced in the second quarter, while disbursements for ongoing projects will mainly occur in the third quarter after achieving significant milestones,” the government noted.
In Kebbi State, officials blamed the decline in capital spending on the “gradual re-evaluation of all capital projects to ensure proper procurement practices are followed.”
The government also prioritised the payment of outstanding contract arrears.
“The State Government continues to prioritise major infrastructural projects while ensuring a keen focus on education, health and other social sectors,” the report said, adding that MDAs have been urged to “intensify fund requests for completion of projects.”
Adamawa reported capital expenditure of N52.4bn out of a N348.9bn allocation, representing just 15 per cent performance.
“While this performance may appear low, the state is making efforts to improve investment in long-term projects,” the government explained.
Across the board, state governments blamed insecurity, procurement delays, bureaucracy, weak capital inflows, and high project costs for their poor performance. While most expressed optimism that execution will improve in the third quarter, analysts warn that persistent underperformance in capital expenditure could stall infrastructure delivery and economic growth at the subnational level.
A Professor of Economics at Babcock University, Segun Ajibola, stated that the enduring problem of high governance expenses had persisted at the state level, with inadequate oversight and accountability resulting in minimal economic benefits for grassroots citizens.
Meanwhile, Nigeria’s 31 states spent a combined N2.36tn on recurrent expenditure between January and June 2025, surpassing by 18.3 per cent or N364bn, the N1.994tn governors personally racked up on refreshments, sitting allowances, travel and utilities in the first nine months of 2024.
A breakdown of the states’ recurrent bills, obtained from official budget performance reports, shows that Ogun (N157.15bn), Kogi (N133.22bn), Oyo (N129.06bn), Kano (N115.24bn) and Akwa Ibom (N113.44bn) topped the chart as the biggest recurrent spenders in the first half of this year.
On the other hand, Enugu (N22.06bn), Katsina (N26.39bn), Zamfara (N37.57bn), Ebonyi (N38.38bn) and Abia (N39.73bn) reported the lowest recurrent allocations in the period.
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