Nigeria’s petrol tax: Impact on ride-hailing drivers explained

In March 2026, Nigeria’s ride-hailing drivers staged a three-day strike over fuel costs, platform commissions, and the 5% petrol tax, which could make things significantly worse, and it hasn’t even been implemented yet.

Key takeaways

Nigeria’s 5% fossil fuel surcharge was signed into law in June 2025 but is not yet active. Once triggered, every ₦10,000 petrol purchase adds ₦500 directly to driver costs.
Drivers already spending up to ₦180,000 weekly on fuel will absorb an additional ₦9,000 per week when the surcharge kicks in, tightening margins in a gig economy that is already under serious strain.
Platform commissions of 20–30% and sluggish fare adjustments have already pushed drivers to strike in 2026, meaning the surcharge lands on a system that has no slack left to absorb it.
Nigeria’s petrol consumption figures suggest the surcharge could generate roughly ₦796 billion annually, confirming that this is a serious fiscal policy measure.
CNG vehicles are exempt from the surcharge entirely, creating a cost differential that could meaningfully impact how ride-hailing drivers think about vehicle choice going forward.

The Nigeria Tax Act 2025 reintroduced a 5% fossil fuel surcharge, which hasn’t been implemented yet. While it’ll undoubtedly affect Nigerians when it comes into effect, it’ll impact ride-hailing drivers (Uber, Bolt, and inDrive) with particular force.

If you drive for a ride-hailing platform, fuel is the load-bearing wall of your entire business model. In a gig economy where margins are already being squeezed by platform commissions, naira depreciation, and fares that haven’t kept pace with operating costs, even a 5% increase on your single largest expense is more than a minor inconvenience.

Let’s examine what the surcharge is and what the current pressure building across Nigeria’s ride-hailing sector tells us about where this is heading.

What the Nigerian petrol tax is

First of all, it’s not a new tax.

The 5% fossil fuel surcharge goes back to the Federal Roads Maintenance Agency Act of 2007. It was originally introduced to fund road infrastructure maintenance. However, it was never meaningfully enforced and quietly faded into the background, existing largely on paper for nearly two decades.

The Nigeria Tax Act 2025 revived it, gave it a proper legal home, and built an enforcement structure around it that the 2007 version never had.

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It’s not active yet

“What is in the law is that this surcharge will take effect on a date in the future based on an order to be released by the Minister of Finance,” Taiwo Oyedele, the then Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, confirmed.

The law requires the Minister of Finance to issue a formal gazette order before the surcharge can be collected. As of April 2026, that order has not been issued. If you’re filling your tank today, this tax is not in your pump price.

What happens when it activates?

Once the gazette order is issued, a 5% surcharge applies to petrol, diesel, and aviation fuel at the point of sale, with the amount collected monthly by the Nigeria Revenue Service (NRS).

What’s exempt?

Compressed Natural Gas (CNG), cooking gas or Liquefied Petroleum Gas (LPG), household kerosene, and renewable energy sources are all explicitly excluded from the surcharge.

The practical translation for ride-hailing drivers is that petrol vehicle operators pay, but CNG operators don’t.

What the tax will cost ride-hailing drivers

Nigerian ride-hailing drivers are already operating on margins that don’t have much give. Fuel is the dominant operating expense, and at pump prices hovering between ₦1,200 and ₦1,300 per litre across most Nigerian cities.

Drivers covering meaningful daily distances are spending serious money just to stay on the road. Some are spending up to ₦180,000 per week on fuel alone, before a single naira goes to platform fees, maintenance, or their own income.

What the 5% surcharge actually adds

Weekly fuel spend	Extra weekly cost	Extra monthly cost
₦80,000	₦4,000	₦16,000
₦120,000	₦6,000	₦24,000
₦180,000	₦9,000	₦36,000

The surcharge number alone doesn’t tell the full story. You have to layer it onto what drivers are already absorbing, including platform commissions, maintenance costs, and low fares.

So before the petrol tax even activates, the average Nigerian ride-hailing driver is already working longer hours to protect a shrinking take-home income. The surcharge, while not creating a new problem, compounds an existing one.

The sector is already fracturing

If this were a stable, well-margined industry, a 5% fuel surcharge might be inconvenient but manageable. Nigerian ride-hailing is neither of those things right now.

The March 2026 strike wasn’t a surprise

In March 2026, drivers across Lagos platforms (Uber, Bolt, inDrive, and Lagride) went on strike for three days. The grievances weren’t new, but the collective action was another signal that tolerance for the status quo had run out.

Drivers pointed to three specific pressure points:

Fuel costs, which had made daily operations financially irrational for many.
Platform commissions that sit between 20% and 30% that drivers argued bore no relationship to their actual cost structures.
Fare rates that hadn’t meaningfully tracked the inflation in their operating expenses.

The subsidy removal effect

To understand why the margin situation is this acute, you have to go back to May 29, 2023.

When Nigeria removed its fuel subsidy, petrol prices moved from approximately ₦199 per litre to over ₦557, an increase of roughly 180% in two days.

Ride-hailing platforms adjusted fares in response, but the adjustments were incremental and partial. The gap between what drivers now spend on fuel and what platforms pay them per kilometre widened and largely stayed wide. Drivers absorbed the difference.

What drivers are now doing

You’ve probably experienced this if you use ride-hailing apps regularly in Nigeria. The app quotes ₦7,000 for a trip, and the driver calls before pickup and says ₦9,000 cash. That negotiation is a direct symptom of a fare structure that stopped making sense for drivers a long time ago.

The CNG exemption

Under the Nigeria Tax Act 2025, Compressed Natural Gas (CNG) is explicitly excluded from the fossil fuel surcharge. When the gazette order activates the 5% surcharge on petrol, CNG-powered vehicles simply won’t have to pay it.

Why does this create a structural advantage?

CNG already had a cost-per-kilometre advantage over petrol before the surcharge existed. It attracts growing government infrastructure support.

And once the 5% surcharge activates, the gap between running a petrol vehicle and a CNG vehicle widens further, automatically, without CNG drivers doing anything differently.

Petrol drivers are getting more expensive to operate. CNG drivers stay exactly where they are. That’s a structural cost advantage that compounds every week.

Can drivers switch from fuel to CNG?

Switching to CNG isn’t a decision you make overnight.

Conversion kits carry upfront costs that many drivers, already operating with thin margins and limited savings, can’t easily absorb.
CNG filling stations are still concentrated in specific corridors and aren’t evenly distributed across Nigerian cities.
The conversion process requires downtime that costs drivers’ income they can’t afford to lose.

The question, I suppose, remains whether the oncoming surcharge on petrol can justify the inconvenience of making the switch.

FAQs

Is the 5% petrol tax currently in effect?

No. As of April 2026, the surcharge has not been activated.

Will ride-hailing platforms increase fares to compensate?

Likely, but history says not immediately and not fully.

Does switching to CNG eliminate the tax exposure?

Yes, CNG is fully exempt from the surcharge with no conditions attached.

Conclusion

The petrol tax arrives in a ride-hailing economy already squeezed by tripled fuel prices, platform commissions that drivers say bear no relationship to their real costs, and fares that have consistently lagged behind inflation.

Drivers will have to do more to protect their livelihoods. Some will work longer hours to protect their take-home income. Others will negotiate fares outside the app. A few will start running the CNG conversion numbers seriously for the first time.

When the gazette order drops, the impact certainly won’t ease gradually. It will land on a system with no buffer left to absorb it quietly.

Citations

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