New tariff aims to protect local refineries and stabilize 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 major policy shift expected to boost local refining and strengthen stability in the downstream oil sector.
The new import tariff, announced in a presidential directive dated October 21, 2025, was made public on Wednesday. The directive instructs the Federal Inland Revenue Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to immediately begin enforcing the new rate on all petroleum product imports.
According to the presidency, the measure forms part of a broader “market-responsive import tariff framework” designed to encourage investment in domestic refining while ensuring a fair and sustainable pricing structure across the sector.
Tinubu’s approval follows FIRS recommendation
The directive, signed by Damilotun Aderemi, the president’s private secretary, confirmed Tinubu’s approval of a proposal submitted by FIRS Chairman Zacch Adedeji.
Adedeji’s memo outlined a plan to apply a 15 per cent duty on the cost, insurance, and freight (CIF) value of all imported petrol and diesel products. He explained that the policy is meant to reflect real market conditions and reduce the pricing imbalance between imported and locally refined products.
“The core objective of this initiative is to operationalize crude transactions in local currency, strengthen local refining capacity, and ensure a stable, affordable supply of petroleum products across Nigeria,” Adedeji stated.
He noted that the move aligns with President Tinubu’s Renewed Hope Agenda, which prioritizes energy security, job creation, and sustainable economic growth.
Addressing fuel market volatility
In his memo to the president, the FIRS boss warned that the wide gap between local refining prices and import parity benchmarks has caused instability in Nigeria’s fuel 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,” Adedeji wrote.
He explained that import parity pricing often falls below cost recovery levels for Nigerian refineries, especially when exchange rates and freight costs fluctuate. This, he said, threatens the long-term sustainability of newly established local producers.
“The government has a twofold responsibility — to protect consumers and domestic producers from unfair pricing and collusion, while also ensuring refiners can recover costs and attract investments,” he added.
How the new duty affects petrol prices
Government projections attached to the presidential approval letter show that the 15 per cent import duty could raise the landing cost of petrol by about ₦99.72 per litre.
“At current CIF levels, this represents an increment of approximately ₦99.72 per litre, which nudges imported landed costs toward local cost-recovery levels without choking supply or inflating consumer prices beyond sustainable thresholds,” the letter explained.
Even with the new adjustment, the estimated pump price in Lagos is expected to remain around ₦964.72 per litre ($0.62). This price still sits significantly below regional averages — Senegal ($1.76/litre), Côte d’Ivoire ($1.52/litre), and Ghana ($1.37/litre) — underscoring the government’s effort to maintain affordability.
Policy targets local refining growth
The decision is part of Nigeria’s wider strategy to reduce reliance on imported fuel and ramp up domestic refining capacity.
The 650,000-barrels-per-day Dangote Refinery in Lagos has already 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 developments, imported petrol still accounts for about 67 per cent of Nigeria’s total consumption, according to recent data from the NMDPRA.
Officials say the new tariff structure is designed to discourage excessive imports while helping local refineries remain competitive in a liberalized market.
Expert opinions and market outlook
Economic analysts have described the move as a “protective but necessary step” to stabilize Nigeria’s downstream petroleum market. By aligning import duties with real market conditions, they argue, the government could create a level playing field for both importers and local producers, thereby encouraging more domestic investments.
However, some consumer advocates caution that the policy could lead to a modest rise in pump prices if not carefully managed. They have urged the government to accompany the new duty with measures that improve refinery efficiency and reduce logistics costs.
The Tinubu administration maintains that the 15 per cent duty will balance market forces, enhance local productivity, and ultimately ensure a more self-sufficient energy sector.
