FG Defends 5% Fuel Surcharge, Says Revenue Will Fund Road Rehabilitation

The Federal Government has justified its proposal to introduce a 5% fuel surcharge, clarifying that the levy is intended to generate essential funding for the repair and modernization of Nigeria’s deteriorating road infrastructure.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, provided the explanation on Tuesday during an appearance on Channels Television’s Morning Brief. While acknowledging public concerns that the surcharge could exacerbate inflation, Oyedele emphasized that improved road conditions would ultimately lead to lower transportation costs and greater price stability.

“I understand the concerns about inflation, I share them,” stated Oyedele. “However, quality road infrastructure is critical. With only 60,000 kilometres of Nigeria’s 200,000-kilometre road network in good condition, transportation remains costly and unsafe. This measure aims to change that.”

Included in the recently enacted Nigeria Tax Act, 2025, the surcharge is scheduled to take effect in January 2026. The proposal has, however, drawn strong opposition from labour groups, including the Trade Union Congress (TUC), which has threatened a nationwide strike if the policy is not withdrawn.

Oyedele noted that the surcharge is not a new concept, having been initially introduced in 2007 but suspended due to fuel subsidies. According to him, the current removal of subsidies, while creating fiscal space, remains insufficient to address the country’s infrastructure deficit.

To mitigate inflationary effects, the government plans to implement the surcharge strategically, potentially aligning it with periods of naira appreciation or declining global crude prices. “If the naira strengthens by 5% or oil prices drop by a similar margin, the impact of the tax would be negligible at the pump,” Oyedele explained.

He further assured that revenue generated from the surcharge would be strictly dedicated to road projects, citing the success of existing initiatives such as the Road Infrastructure Tax Credit Scheme, which has attracted private investment from firms like Dangote, NLNG, Lafarge, and MTN.

Oyedele affirmed that the policy includes provisions for review or repeal by the National Assembly should it fail to achieve its intended outcomes.