Daniel Otera
President Bola Tinubu has approved a 15 per cent import duty on petrol and diesel, a policy that may push pump prices higher whilst aiming to shield local refineries from foreign competition.
The directive, contained in a letter dated 21st October 2025 and made public on Wednesday, instructs the Federal Inland Revenue Service and the Nigerian Midstream and Downstream Petroleum Regulatory Authority to implement the tariff immediately under what the government termed a “market-responsive import tariff framework.”
The correspondence, signed by the President’s Private Secretary, Damilotun Aderemi, followed a proposal from the FIRS Executive Chairman, Zacch Adedeji, who advocated for the duty to be applied on the cost, insurance and freight value of imported fuel products.
Adedeji explained that the measure formed part of broader reforms designed to strengthen domestic refining capacity, stabilise prices and advance the administration’s Renewed Hope Agenda for energy security.
“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 stated in his memo to the President.
He warned that the current gap between locally refined products and import parity pricing has created market instability, particularly as emerging domestic refineries struggle to compete with cheaper imports.
“Whilst 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.
The FIRS chairman noted that import parity pricing, which serves as the benchmark for determining pump prices, frequently falls below cost recovery levels for local producers during periods of foreign exchange and freight fluctuations, placing undue pressure on Nigeria’s nascent refining sector.
“The government’s responsibility is twofold: to protect consumers and domestic producers from unfair pricing practices and collusion, whilst ensuring a level playing field for refiners to recover costs and attract investments,” Adedeji argued.
According to projections in the letter, the 15 per cent duty could add approximately N99.72 to the landing cost of each litre of petrol.
“At current CIF levels, this represents an increment of approximately N99.72 per litre, which nudges imported landed costs toward 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 document stated.
The policy arrives as Nigeria intensifies efforts to reduce reliance on imported petroleum products and scale up domestic refining operations.
The 650,000 barrels-per-day Dangote Refinery in Lagos has begun producing diesel and aviation fuel, whilst modular refineries in Edo, Rivers and Imo states have commenced small-scale petrol production.
However, despite these advances, petrol imports still account for up to 67 per cent of national consumption.
Industry watchers have expressed mixed reactions to the development, with some arguing that the duty may help insulate local refineries from unfair competition, whilst others fear it could exacerbate the burden on consumers already grappling with high fuel costs.
The government maintains that the tariff will create a fairer competitive environment for domestic producers without pushing pump prices beyond sustainable levels.