The Federal Government has announced the introduction of a 5 percent fossil fuel tax as part of its new fiscal and environmental policy measures. This means Nigerians will now pay ₦500 on every ₦10,000 spent on petroleum products.
The policy, approved by the Federal Executive Council (FEC) and expected to take effect from October 1, 2025, is aimed at discouraging excessive dependence on fossil fuels, boosting government revenue, and supporting the nation’s transition to cleaner energy sources.
Minister of Finance, Budget and National Planning, Wale Edun, who disclosed this at a press briefing in Abuja on Tuesday, explained that the new tax aligns with Nigeria’s commitments to climate change agreements and sustainable development goals.
“The fossil fuel tax is both an environmental and economic tool. While it will contribute significantly to government revenue, it will also help in reducing carbon emissions and encourage investment in renewable energy,” Edun stated.
Implications for Nigerians
With the new tax, motorists, businesses, and households will feel the direct impact at filling stations and across industries reliant on diesel, petrol, and kerosene. A ₦10,000 purchase of petrol will now attract an additional ₦500 levy, raising the effective cost to ₦10,500.
Transport operators have already warned that the measure could trigger a new wave of fare increases, further straining households already grappling with inflation and high living costs.
Mixed Reactions
While environmental groups welcomed the move as a “step in the right direction,” labour unions and civil society organizations condemned it as “anti-people” and called for its reversal.
The Nigeria Labour Congress (NLC) described the policy as a “fresh burden on struggling citizens” and threatened mass action if the government fails to provide palliatives.
Energy economists, however, argue that if properly managed, the policy could reduce Nigeria’s dependence on oil revenues and push investments into solar, wind, and other clean energy alternatives.
Looking Ahead
The fossil fuel tax is projected to generate over ₦800 billion annually, according to government estimates. Officials say part of the proceeds will be channeled into renewable energy projects, public transportation, and subsidies for electric vehicles.
Nigeria joins a growing list of countries introducing carbon or fossil fuel taxes as global momentum against climate change intensifies.
Leave a Reply