Fuel price : What Nigerians should expect after Tinubu’s 15% import duty – Marketers

 

Major oil marketers have raised concerns that the federal government’s decision to impose a 15 per cent import duty on petrol and diesel could trigger another round of fuel price increases.

President Bola  Tinubu recently gave approval for the tariff through a letter dated October 21, 2025, with reference number PRES8197/HAGF/100/71/FIRS/40/88-2/NMDPRA/2. The letter, signed by his Private Secretary, Damilotun Aderemi, was addressed to the Attorney General of the Federation, the Federal Inland Revenue Service (FIRS), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

The letter titled “Re: Introduction of a Market-Responsive Import Tariff Framework on Premium Motor Spirit (PMS) & Diesel” followed a proposal by FIRS Chairman Zacch Adedeji, who argued that applying the import duty would align costs with domestic realities.

Adedeji explained that the tariff, based on the Cost, Insurance, and Freight (CIF) value, could add around ₦99.72 per litre to petrol prices.

“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.

He added that market instability stems from the wide price gap between imported and locally refined products.

“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.

Adedeji emphasized that government policy aims to balance protection for consumers and local producers while sustaining investment in refining.

Projections in the letter show that the new duty could raise the landing cost of petrol by about ₦99.72 per litre, keeping Lagos pump prices within ₦964.72 per litre—still below regional averages in countries like Senegal, Côte d’Ivoire, and Ghana.

Division over policy
The move has further divided stakeholders in the downstream oil sector. Supporters say it will promote local refining and reduce import dependence, while others fear it will worsen inflation and hardship.

Despite the Dangote Refinery’s claim that it can meet domestic demand, data from the NMDPRA show that local refineries supplied only 30.79 per cent of petrol consumed in June 2025, with 67 per cent still imported.

Dangote Refinery’s Vice President, Oil and Gas, Mr. Devakumar Edwin, recently stated:

“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.”

He maintained that the 650,000-barrel-per-day facility could meet Nigeria’s entire petrol, diesel, and aviation fuel needs while exporting excess production.

Marketers express concern
Some marketers are skeptical, insisting the new levy will drive up prices.

“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,” one marketer said in confidence.

Otunba Tunji Oyebanji, Managing Director of 11PLC, remarked:

“15 per cent to the government is a lot of revenue to the government but higher prices for Nigerians.”

While the Independent Petroleum Marketers Association of Nigeria (IPMAN) said it would present its stance soon, its former General Secretary, Mike Osatuyi, backed the duty as a way to protect local refiners.

“The purpose is mainly to protect our local refineries… If we didn’t do what the president has done we would kill the local refineries. So it is a good policy,” he said.

Osatuyi argued that fears of higher fuel prices were unfounded since Dangote’s refinery is already exporting excess production.

Economists weigh in
Professor Sanusi Aliyu Rafindadi, a member of the Daily Trust Board of Economists, said the policy aligns with the “infant industry” argument that shields developing industries from foreign competition. However, he urged government oversight to ensure the tariff isn’t merely a revenue tool.

“Since… 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,” he cautioned.

Economist Dr. Paul Alaje agreed that the policy could help protect local manufacturing and reduce reliance on imports.

“So this 15% is to discourage importation of such products… Government will make USD available through the CBN but when such products get into Nigeria, they will be properly detached and revenue will go into the government,” he said.

Professor Emeritus of Petroleum Economics, Wumi Iledare, described the policy as both “protective and corrective,” noting that importers might pass the extra cost to consumers.

“The intent is unmistakable to protect local refineries, reduce import dependency, strengthen the naira-based oil economy, and foster a more disciplined market environment,” he said.

Olabode Sowunmi, CEO of Cabtree Limited, also warned that prices could rise further.

“Except we can show that foreign refiners are selling below their operating costs… this also means fuel price increase. So we may have cost shooting up to ₦1,500 per litre or something like that,” he said.

(DAILY TRUST)