-DailyTrust
Major marketers of petroleum products yesterday warned that the introduction of the 15 per cent import duty on petrol and diesel could signal another round of fuel price increase.
The approval of the duty by President Bola Ahmed Tinubu is causing division in the downstream sector of the oil and gas industry with some economic experts applauding the move as a welcome development aimed at discouraging importation of petroleum products and supporting local refineries, while others express worry over likely hike in prices of petroleum products.
Daily Trust reports that the president’s approval was contained in a letter with reference no: PRES8197/HAGF/100/71/FIRS/40/88-2/NMDPRA/2, dated 21 October.
The letter, titled ‘Re: introduction of a market-responsive import tariff framework on Premium Motor Spirit (PMS) & Diesel,’ was signed by Damilotun Aderemi, the Private Secretary to the President.
The president’s approval followed a request by the FIRS Chairman, Zacch Adedeji for the government to apply the tariff to align import costs with domestic realities.
Adedeji said the duty, applied to the Cost, Insurance, and Freight (CIF) value, is expected to increase petrol prices by approximately N99.72 per litre.
“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 aligning with Your Excellency’s Renewed Hope Agenda for security and fiscal sustainability,” the FIRS said.
Adedeji stated that the current price difference between locally refined products and import parity pricing has created instability in the market.
“While domestic refining of petrol has begun to increase and diesel sufficiency has been achieved, price instability persists, partly due to the misalignment between local refiners and marketers,” he wrote.
According to him, the government’s responsibility is two-fold: to protect consumers and domestic producers from unfair pricing practices and collusion, while simultaneously ensuring a level playing field that allows domestic refiners to cover costs and attract continued investment.
According to projections contained in the letter, the 15 per cent import duty could increase the landing cost of petrol by an estimated N99.72 per litre.
“At current CIF levels, this represents an increment of approximately 99.72 per litre, which nudges imported landed costs towards local cost-recovery without choking supply or inflating consumer prices beyond sustainable thresholds.
“Even with this adjustment, estimated Lagos pump prices would remain in the range of N964.72 per litre ($0.62), still significantly below regional averages such as Senegal ($1.76 per litre), Cote d’Ivoire ($1.52 per litre), and Ghana ($1.37 per litre).”
The case for and against importation
Daily Trust reports that since the commencement of operation of the 650,000-barrel per day Dangote Refinery and Petrochemicals, there have been arguments and counter-arguments over continued importation of petroleum products.
While the Dangote Refinery insists that it can meet the local demands, other marketers warned that the development may trigger a new era of fuel price increase at a time Nigerians are already overburdened.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently revealed that local refineries supplied just 30.79 per cent of the premium motor spirit (PMS), popularly known as petrol, consumed in the country in June 2025.
According to the agency, the average daily petrol supply for the month is 49.277 million litres, with local refineries providing 15.172 million litres, while 34.104 million litres were imported.
In a report to the Federation Revenue Reconciliation Committee dated July 10, 2025, and made available to journalists on Tuesday night, the NMDPRA stated that total petrol supply in June stood at 1.478 billion litres, down 16.42 percent from 1.768 billion litres in May.
It noted that total truck-out volume in June was 1.44 billion litres, compared to 1.678 billion litres in May.
Of the total supply in June, 455.188 million litres came from local refineries, while imports accounted for 1.295 billion litres.
As of today, 67 per cent of fuel consumed locally is still imported despite the insistence by Dangote Refinery that it can meet the local demand.
The Central Bank of Nigeria (CBN) also released a total sum of $1.259bn to oil sector players for the importation of petroleum products and other related items into the country in the first three months of 2025, Daily Trust gathered.
The amount released between the first three months of 2025 is against the backdrop of the insistence by marketers to continue fuel import.
Recently, the Dangote Refinery through its Vice President, Oil and Gas, Mr. Devakumar Edwin disclosed that the refinery currently has over 312 million litres of Premium Motor Spirit (PMS) in its storage tanks, aside from ongoing daily production.
“I have more than 312 million litres of PMS as of today inside my tanks, apart from the production which is coming out every day. Bring your tankers. We will load. Any number of tankers you bring, we’ll load. It’s a challenge I’m throwing today.
“No one can come and tell me I’m not loading. We can load any number of tankers you bring. So, you can see whether I have the capacity to produce or not. We have more than 310 million litres as of now,” he said.
With a processing capacity of 650,000 barrels per day, he said the plant is capable of meeting Nigeria’s entire demand for petrol, diesel (AGO), and aviation fuel (Jet A1), while still exporting nearly 50 per cent of its products.
“This refinery produces about 94 per cent light products — PMS, AGO, and Jet A1 — with only six per cent being heavier by-products like carbon black feedstock. That’s far better than the older Nigerian refineries,” he noted.
‘Imposition of duty will lead to price hike’
While there has not been an official reaction yet from either the Major Energies Marketers’ Association of Nigeria (MEMAN), or the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), some of their members who spoke with our correspondent insisted the fuel import levy would lead to price increase.
“The issue around capacity that Dangote Refinery talked about is contestable and I don’t think the capacity is there yet. So if you are imposing this duty, it means we should be prepared for a new regime of fuel price increase.
“The truth is we are not getting enough from the refinery and we know that when we order from Dangote Refinery, we don’t get it on time,” one of the major marketers who spoke in confidence said.
Speaking with our correspondent, the Managing Director of 11PLC (formerly Mobil), Otunba Tunji Oyebanji said, “15 per cent to the government is a lot of revenue to the government but higher prices for Nigerians.”
President of the Independent Marketers’ Association of Nigeria (IPMAN), Alhaji Abubakar Maigandi, in a chat with our correspondent said the association would make its position known on Monday.
However, a former General Secretary of IPMAN, Mike Osatuyi, welcomed the move which he stated would support investment by the local refineries.
“The purpose is mainly to protect our local refineries. For decades, Nigeria has been known for importation of petroleum products and we are used to it. We are providing employment for the foreign countries at the expense of the economy of Nigeria.
“So Dangote wants to go to 1.4m barrels per day which is going to be the biggest in the whole world. By the time it comes up, then other refineries too are coming up, BUA Refinery too is coming up, all these local refineries need to be protected.
“If we didn’t do what the president has done we would kill the local refineries. So it is a good policy.”
Osatuyi insisted that with the capacity of the Dangote Refinery, the fear of fuel price hike is misplaced, adding that if Dangote does not have the capacity to meet local demand, it would not be exporting to other countries.
“If he is exporting, it means that he has in excess more than what we need but some people have been benefitting from importation and they don’t want it to stop. What the President has done is the best because we need to protect ourselves and not outsiders,” he said.
Professor Rafindadi gives perspective
A member of the Daily Trust’s Board of Economists, Professor Sanusi Aliyu Rafindadi in his intervention said the policy is welcomed but said the government must keep an eye on the market to ensure the intended result is achieved.
He said, “First, taxes/tariffs can be used to encourage local production where competition from imported alternatives threatens the survival of domestic producers.
“In theory, it is part of the so-called infant industry argument, which posits that where domestic industry in developing countries are in their infant stages, allowing them to compete with mature producers in developed countries would be unfair and would hurt their prospects. Therefore imposing tariffs would level-up the playing by increasing the local price of the imported goods in the domestic market.
“Normally, the tariff rate imposed should be the difference in cost of product and distribution between the domestic and foreign producers. This is to equalize the final prices the consumer pays so that the foreign producers do not have any undue advantage over the local infant industry.”
According to him, the approach is more preferred than total ban. He also tasked Dangote to “expand its reach in the domestic market so that the majority distributors can sell at the prices that MRS is currently selling.”
Rafindadi added, “This approach is preferred to total ban in the international trading system. So to the extent that the importers of petroleum products have price advantages that vary Dangote refinery, this policy should be welcomed. However, evidence doesn’t appear to support this.
“In fact to the contrary, Dangote products are already being sold to the final buyers at lower prices than the imported. MRS, which sells Dangote products are cheaper than those of the independent marketers.
“It is therefore difficult to view the approved 15% tariff from this perspective. However, if the government is sold this infant industry argument, then the government must keep an eye on the market, especially the pricing dynamics.
“Since, given its cost structure, the Dangote refinery has been able to sell below the price that other marketers were selling, it should not be the case that following the tariffs, their prices also rise.
“If this happens, then the second perspective, which is revenue motive, will appear more credible. Tariffs, being a potentially great source of revenue for governments, especially when placed on imported products whose local demand is inelastic such as petroleum products, may be politically difficult to justify given the recent history of price responses to the subsidy withdrawal.
“But it is a more plausible basis than the protection of local infant refineries. In summary, the tariff may help governments achieve greater revenue inflows and protect the Dangote refineries and also help Nigerians access the lower fuel prices that the Dangote refineries presently offer.
“To achieve this, the government must keep an eye on the industry to ensure that this 15% is not passed on to the consumers.”