Nigeria's motorists have been on edge since talk of a 5% fuel surcharge began circulating. Although embedded in law since 2007 under the Federal Roads Maintenance Agency (FERMA), the levy was revived in the 2025 Tax Administration Act, sparking questions about its impact on fuel prices and an already fragile economy. The proposal is simple: collect a 5% surcharge on petrol and diesel at the pump to fund Nigeria's overstrained road network. In theory, this offers a stable revenue stream for a chronically underfunded sector. In practice, it collides with the lived reality of a country still adjusting to subsidy removal, soaring inflation and transport costs.
Despite the headlines, the surcharge is not yet being collected. It becomes legally possible on 1 January 2026 but still requires a commencement order from the Minister of Finance. Officials, including Finance Minister Wale Edun, have stressed that no such order has been issued and say that the government is sensitive to the cost-of-living crisis. Since subsidies were lifted in May 2023, pump prices have more than tripled, cascading into higher fares, food costs and manufacturing expenses. Inflation now hovers around 34 per cent, with food inflation even higher. Against this backdrop, any extra levy on fuel -- however small in percentage terms -- risks amplifying hardship and sparking unrest.
Fuel pricing has long been one of Nigeria's most contested policy areas. Labour unions have already signalled their opposition. The Trade Union Congress has threatened protests if the government proceeds without safeguards, while civil-society groups call the measure regressive, likely to hit low-income households and small businesses reliant on road transport. Yet the case for dedicated road funding is strong. Nigeria has more than 195,000 kilometres of roads in varying states of disrepair, and successive administrations have struggled to allocate sufficient maintenance budgets. Countries such as South Africa and Kenya show how earmarked road-user fees can finance sustained infrastructure improvements. Supporters argue that, if transparently managed, the surcharge could function as a "user-pays" system -- motorists funding the infrastructure they depend on.
Trust Deficit
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The obstacle is trust. Nigerians already pay a host of transport-related levies with little visible return. Beyond fuel itself, motorists face tolls on highways such as the Lekki-Epe Expressway and the Abuja-Kaduna-Kano route, among others. They also pay indirect charges embedded in petroleum pricing, including contributions to the Petroleum Equalisation Fund and FERMA's original levy in the fuel pricing, built into the Petroleum Products Pricing Regulatory Agency (PPPRA) template-pricing model used to determine the landing cost and pump price of fuel in Nigeria. Yet despite these payments, road conditions often remain poor, with potholes, failed drainage and unlit highways common nationwide. Without clear oversight -- such as a public dashboard for accountability or an independent fund manager -- fears persist that any new surcharge would vanish into general revenue rather than improve roads.
Building credibility is essential to persuading the public that this is not merely another tax but an investment with tangible benefits. Advocates say the funds could finance routine maintenance, new construction and essential safety upgrades, potentially reducing transport costs over time. But sceptics insist that without procurement reform and stronger institutions, the money will be wasted and citizens will simply shoulder higher costs with no visible positive outcome.
For now, the 5% fuel surcharge exists on paper but not at the pump. The government appears to be treading carefully, mindful of both economic pressures and public sentiment. Whether it ultimately proceeds will depend on fiscal space, consultations with stakeholders and, crucially, its ability to demonstrate that Nigerians will see real improvements in exchange for their money. Implemented with transparency and clear results, the surcharge could be a turning point in how Nigeria funds its infrastructure. Managed poorly, it risks becoming a flashpoint -- another measure deepening the squeeze on households rather than easing the path to development. In a country where every change in fuel pricing reverberates across the economy, the handling of this levy may determine whether it becomes a catalyst for progress or a trigger for public backlash.
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*Ugo Inyama writes from the African Digital Governance Centre, Manchester, UK.www.africandgc.org
