…Move aimed at protecting local refineries, stabilising fuel market

President Bola Ahmed Tinubu has approved the implementation of a 15 per cent ad-valorem import duty on petrol and diesel imported into Nigeria — a policy move aimed at protecting domestic refineries and promoting stability in the downstream oil sector.

The directive, dated October 21, 2025, and made public on Wednesday, instructed the Federal Inland Revenue Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to immediately begin enforcing the new tariff.

According to the presidency, the decision forms part of a new “market-responsive import tariff framework” designed to support Nigeria’s energy security agenda and reduce dependence on imported petroleum products.

The presidential approval, conveyed in a letter signed by Damilotun Aderemi, the President’s Private Secretary, endorsed a proposal submitted by FIRS Chairman Zacch Adedeji. The proposal recommended a 15 per cent duty on the Cost, Insurance, and Freight (CIF) value of imported petrol and diesel to better reflect market realities and encourage local refining.

Adedeji explained that the measure aligns with the administration’s “Renewed Hope Agenda”, particularly its focus on energy reform and macroeconomic stability.

“The core objective of this initiative is to operationalise crude transactions in local currency, strengthen local refining capacity, and ensure a stable, affordable supply of petroleum products across Nigeria,” Adedeji said.

He noted that persistent price instability in the fuel market was partly due to the gap between local refining costs and import parity benchmarks.

“While domestic refining of petrol has begun to increase and diesel sufficiency has been achieved, market volatility remains, partly because of misalignment between local refiners and import marketers,” he wrote.

The FIRS Chairman warned that import parity pricing often undercuts domestic producers, especially amid fluctuating foreign exchange rates and shipping costs — threatening the viability of Nigeria’s emerging local refineries.

“Government must protect both consumers and domestic producers from unfair pricing and ensure refiners can recover costs and attract investments,” he added.

Adedeji said the new tariff will help prevent duty-free fuel imports from undermining local production, while promoting a fair and competitive downstream environment.

Projections contained in the approval note indicate that the 15 per cent duty could raise the landing cost of petrol by approximately ₦99.72 per litre.

“At current CIF levels, this represents an increment of about ₦99.72 per litre, aligning import costs closer to local cost recovery without significantly raising pump prices,” the document stated.
“Even with this adjustment, estimated Lagos pump prices would remain around ₦964.72 per litre ($0.62), still below regional averages such as Senegal ($1.76), Côte d’Ivoire ($1.52), and Ghana ($1.37).”

The new tariff aligns with Nigeria’s broader push to boost domestic refining and cut import dependence.

The 650,000 barrels-per-day Dangote Refinery in Lagos has commenced production of diesel and aviation fuel, while several modular refineries in Edo, Rivers, and Imo States have begun small-scale petrol refining.

Despite these gains, imported petrol still accounts for about 67 per cent of Nigeria’s total consumption — a gap the government hopes to narrow through this new policy.