Beginning January 2026, Nigerians will pay a new 5% tax on petrol consumption, a move the Federal Government says is aimed at discouraging reliance on fossil fuels and generating funds for climate-related projects. The levy, introduced under the Harmonized Tax Act, will be collected at the point of purchase, meaning motorists and businesses will pay ₦500 on every ₦10,000 worth of petrol purchased.

Government officials explained that the new charge will not apply to kerosene, cooking gas, Compressed Natural Gas (CNG), or other clean energy sources, as part of efforts to encourage citizens to adopt environmentally friendly alternatives.

While authorities insist that the policy will help Nigeria transition to cleaner energy and finance climate programs, economic analysts have warned that the tax could worsen inflation. With transportation heavily dependent on petrol, the added cost may drive up prices of goods and services, piling more pressure on households already struggling with rising living costs. Critics also argue that the policy will weigh more heavily on low-income earners who rely on petrol for daily commuting and small businesses.

Supporters of the measure, however, insist that Nigeria must align with global energy transition goals and that revenues from the levy will be channeled into clean energy infrastructure. Although it is not yet clear whether the measure has received final legislative approval, multiple reports confirm that preparations are underway for its rollout in January 2026, leaving Nigerians bracing for another increase in fuel-related costs.