FG to Introduce Fuel Tax When Incomes Improve, Economy Stabilises
Oyedele disclosed this in an interview with Arise TV on the sidelines of the 2026 annual meetings of the International Monetary Fund and World Bank in Bangkok, Thailand.
The minister said taxes account for between 20 and 80 per cent of petrol pump prices in some countries, while several African countries impose between six and 10 different taxes on petroleum products.
He explained that introducing the tax while petrol was still subsidised would have defeated its purpose, as the government would effectively have been paying the levy itself. Implementing it immediately after the removal of the subsidy would also have increased the financial burden on Nigerians.
Oyedele said suppressing prices was not a sustainable way to manage the economy, arguing that government policies should instead focus on ensuring that incomes grow faster than prices to improve living standards, promote prosperity and strengthen the middle class.
He added that the proposed levy was not intended to impose taxes for their own sake but to generate revenue for road infrastructure and establish a fuel reserve to cushion the impact of price shocks in the petroleum market.
According to him, the reserve would give the government the flexibility to temporarily suspend the tax whenever petroleum prices rise sharply, helping to moderate the impact on consumers.
Oyedele also said the law requires a gazette order signed by the finance minister before the tax can take effect, ruling out the possibility of introducing it secretly. He added that the government would explain the rationale behind the policy and its expected benefits to Nigerians before implementation.
The minister further explained the sequence of the petrol subsidy removal and foreign exchange reforms, saying the government first removed the subsidy on petrol prices before allowing the naira to adjust gradually, given the significant influence of exchange rate movements on petrol prices.
He said that when the naira weakened to between N1,600 and N1,700 against the dollar, the government quietly capped the exchange rate to manage the impact on Nigerians, although he could not recall the exact rate at the time.
According to Oyedele, the intervention explained why some level of subsidy persisted in 2023 despite the government’s announcement that it had ended the petrol subsidy. He added that the subsidy was fully removed in October 2023, when support for both petrol prices and foreign exchange was discontinued.
