The Potential Hike in Fuel and Diesel Costs: A Look at the 5% Road User Charge
Rising Diesel and Fuel Prices are at stake as the Federal Government and the House of Representatives contemplate the imposition of a 5% Road User Charge.
It appears that the cost of premium motor spirit and automotive gas oil may soon see an uptick. This comes as the Federal Ministry of Works and the House of Representatives are advocating for the incorporation and collection of a 5 per cent road user charge in fuel and diesel pricing.
According to reports from our sources, this revelation emerged during an investigative hearing held by the House of Representatives Ad-Hoc Committee on Monday in Abuja.
As mentioned by the Minister of State for Works, Mohammed Goroyo, there is an immediate need for the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to enforce the 5 per cent road user charge collection. This move is aimed at helping to bridge the funding gap for the upkeep of federal roads in the country.
Goroyo emphasized that Nigeria calls for a whopping ₦800 billion annually for road upkeep, but the budget allocated to the Federal Roads Maintenance Agency has consistently fallen short.
He stated, "FERMA requires an estimated N880bn annually for optimal road conditions. Budgetary allocations have consistently fallen short – ₦76.3bn in 2023 and ₦103.3bn in 2024, while ₦168.9bn was budgeted for 2025."
He further highlighted the negative consequences of this funding crunch, including deteriorating road conditions, increased repair costs, and extended disruptions for commuters and businesses alike. Thus, the swift and consistent implementation and remittance of the five per cent user charge are crucial, he stressed.
On the other hand, the Managing Director of the Federal Road Maintenance Agency (NMDPRA), Chukwuemeka Abbasi, disclosed that the framework for deducting the road user charge from petrol and diesel prices was never put into practice by NMDPRA. Abbasi elaborated that the five per cent user charge, as stipulated in the FERMA Act, was intended to serve as a stable funding source for road maintenance and rehabilitation.
However, for many years, FERMA has grappled with significant funding shortages, which have impeded its ability to maintain the country's extensive road network effectively.
Earlier, the Speaker of the House of Representatives, Tajudeen Abbas, recalled that on March 19th, the House had discussed a motion during plenary that highlighted the non-implementation of the remittance of the five per cent user charge on petroleum products designated for road maintenance under the FERMA Amendment Act of 2007.
The chairman of the committee and also the chairman of the House Committee on Rules and Business, Francis Waive, clarified that the five per cent road user charge is not a new initiative to elevate the prices of petroleum products or to amend the law, as it has been a part of legislation since 2007.
Instead, the aim of the investigation is to rectify the inconsistencies arising from non-compliance with existing laws, Waive emphasised. He added that the House will ensure that every law enacted by the parliament is adhered to by both individuals and government agencies.
This development transpired as Nigerians have recently witnessed a decrease in petrol prices. Recently, retail outlets of the Nigerian National Petroleum Company Limited, as well as Dangote Refinery and its partners, have dropped their retail prices of PMS to ₦875 and ₦895 per litre in cities like Lagos and Abuja.
Insights:
- The proposed 5% road user charge is expected to increase fuel and diesel prices as it will be factored into their cost if implemented.
- The current implementation of the 5% road user charge by NMDPRA has been delayed despite being a long-standing provision under the FERMA Act. The House of Representatives has called for documents from relevant agencies regarding its collection.
- The funding shortage for road maintenance in Nigeria has led to poor road conditions, increased repair costs, and disruptions, making the swift implementation of the five per cent user charge crucial.
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The potential hike in fuel and diesel costs due to the proposed 5% road user charge is a concern for many Nigerians, particularly businesses and commuters who may face increased costs as a result. Despite the FERMA Act stipulating the five per cent user charge as a stable funding source for road maintenance and rehabilitation, the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has failed to enforce its collection. The House of Representatives has taken note of this matter and called for documents from relevant agencies regarding the collection of the road user charge.
Meanwhile, the APC party is addressing reports of granting automatic tickets to national assembly lawmakers, considering the deepening crisis within the PDP as Wike and Bode George trade blows. In Lagos, a cold reception for Tinubu has exposed tension between Tinubu and Sanwo-Olu, as the political rift deepens.
In other news, top Nigerian newspaper headlines for today highlight ongoing political events, such as the APC's response to Atiku, El-Rufai, and Amaechi's criticism, and Wike's comments on being informed of the Rivers State of Emergency rule.
All of these developments come at a crucial time for Nigeria, as the country grapples with ongoing funding shortages for road maintenance, leading to deteriorating road conditions, increased repair costs, and extended disruptions for commuters and businesses alike. The swift and consistent implementation and remittance of the five per cent user charge are crucial for addressing these issues and ensuring the upkeep of federal roads in the country.
