Falana urges FG to restore FERMA user charge as alternative to 5% fuel tax

Human rights lawyer and Senior Advocate of Nigeria (SAN), Mr. Femi Falana, has urged the Federal Government to reconsider its plan to impose a five per cent fuel tax on petroleum consumers, arguing that the existing Federal Roads Maintenance Agency (FERMA) user’s charge remains the viable alternative.

The Nigeria Tax Administration Act 2025 stipulates a five per cent surcharge on fossil fuel products, excluding renewable energy, household kerosene, cooking gas, and compressed natural gas (CNG). The surcharge is to be collected at the point of supply, sale, or payment.

Falana, through the Alliance on Surviving Covid-19 and Beyond (ASCAB), maintained that restoring the FERMA user’s charge and ensuring transparency in its management remains the credible alternative to the controversial fuel tax.

Defending the measure, Minister of Finance, Mr. Wale Edun, said the surcharge is not a new levy by the administration but a provision previously introduced under the FERMA Act 2007. He clarified that its inclusion in the new Act does not amount to an automatic introduction of fresh taxes.

Similarly, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, explained that the proposed surcharge is intended to raise funds to rehabilitate Nigeria’s dilapidated roads. While acknowledging concerns about inflation, he argued that improved infrastructure would ultimately reduce the cost of transportation.

However, Falana countered the government’s narrative, stressing that this is the first time a direct fuel tax is being imposed on consumers. He cited Section 14(h) of the FERMA Amendment Act, which had already established a five per cent user’s charge on petrol and diesel, with 40 per cent of the proceeds accruing to FERMA and 60 per cent to State Roads Maintenance Agencies.

According to him, the FERMA Act mandated accountability, requiring the agency’s board to publish details of the fund’s utilisation in the media. 

Yet, when he requested FERMA’s accounts in 2011 under the Freedom of Information Act, the agency denied receiving the charge. The government, embarrassed by the revelation, released ₦832 million for road repairs, while the larger outstanding fund remained unaccounted for.
“In October 2022, Senator Gershom Bassey revealed that the Federal Government owed FERMA one trillion naira. Instead of burdening Nigerians with a new fuel tax, the government should remit the outstanding funds and ensure the proper deduction and disbursement of the user’s charge as originally provided by law,” Falana said.

The announcement of the five per cent surcharge has sparked widespread public outcry, with labour unions threatening industrial action if the measure is not withdrawn. To calm tensions, the government has clarified that no commencement order has been issued for its implementation.