Starting January 2026, Nigeria will roll out a new 5% levy on refined fossil fuels, a move the government says is aimed at boosting clean energy adoption. President Bola Tinubu has already signed the measure into law, with projections suggesting it could generate more than half a billion dollars each year.

The tax will apply to petrol and diesel, while cleaner alternatives like cooking gas and compressed natural gas remain exempt in line with the government’s efforts to promote low-emission fuels.

Officials argue the policy will help fund renewable energy initiatives and encourage a shift away from carbon-heavy sources. But critics, including advocacy group ActionAid Nigeria, warn the surcharge will hit low-income households the hardest, especially given the lingering economic strain caused by the removal of fuel subsidies in 2023.

Supporters see the tax as a necessary step toward Nigeria’s climate goals, while opponents view it as an added burden in a country still grappling with high inflation and rising living costs. The debate is likely to intensify as the implementation date approaches.