The recent announcement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to suspend the implementation of 15 per cent import duty on refined petroleum products for six months has sparked mixed reactions among stakeholders, with experts and oil marketers holding divergent views on its potential impact.
The NMDPRA had on Thursday, November 13, announced that the implementation of the 15 per cent ad-valorem duty on imported Premium Motor Spirit (PMS), commonly known as petrol and Diesel, is no longer in view.
“It should be noted that the implementation of the 15% ad-valorem import duty on imported Premium Motor Spirit and Diesel is no longer in view,” the NMDPRA had stated.
The tariff policy, which was proposed by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, and subsequently approved by President Bola Tinubu in late October, was part of measures designed to boost local refining capacity and ensure a stable supply of petroleum products across Nigeria.
The suspension of implementation of the tariff is part of the government’s strategy to encourage private sector-led imports and stabilize the price of petrol.
While petroleum marketers and some stakeholders in the oil industry hailed the suspension, some experts criticised it, warning about the consequences on domestic production.
READ ALSO: Petrol Prices Drop in Abuja After Nigeria Suspends 15% Import Duty
Those who hailed the suspension argued that the importation of petroleum products helps to prevent monopoly by local refineries and encourages competition in the market. They also contended that domestic refineries do not have the capacity yet to meet national demands and the country could experience scarcity and higher prices if the policy is implemented now.
President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Engr Festus Osifo, said suspension of the fuel import duty has saved the country from an impending hike in the cost of petroleum products. In an interview on Arise News, Osifo said domestic refiners currently produce only about 40 per cent of the petroleum products consumed nationwide, while the remaining 60 per cent comes from imports.
The PENGASSAN national president warned that the 15 per cent import duty could trigger higher pump prices, which has a spiraling effect on other activities, including transport, exposing Nigerians to another round of economic pressure. While acknowledging the contribution of the Dangote Refinery to domestic production, Osifo, however, stated that it is yet to sufficiently meet national demands.
In an interview, spokesperson of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, who said the group had earlier opposed the import duty, commended the government for suspending it.
READ ALSO: NNPCL, Marketers Drop Petrol Prices Below Dangote Partners’ Cost in Lagos
Ukadike stressed that since the downstream oil market is now deregulated in line with provisions of the Petroleum Industry Act (PIA), the market forces of demand and supply should be allowed to determine prices and foster competition. He also expressed the belief that allowing imports would help to check local refineries and prevent a monopoly.
Also, Major Oil Marketers and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) have stated that the suspension of the import tariff will ease the massive financial pressure on their members.
The Experts Caution that it is a Short-term Fix with Long-term Risks
While oil marketers see suspension as a lifeline, economic and energy experts have, however, highlighted potential implications of the policy reversal. They warned that it could undermine the long-term goal of energy independence.
The Centre for the Promotion of Private Enterprise (CPPE) warned that the suspension poses a significant threat to domestic refining capacity and Nigeria’s long-term energy sustainability goal.
In a statement signed by its director-general, Dr Muda Yusuf, CPPE warned that it also has grave implications for investment confidence, macroeconomic stability, and the long-term competitiveness of the petroleum downstream sector.
The CPPE said protection of domestic refineries to boost capacity is “an urgent national imperative.”
“Reinstating protective measures, supporting local refiners, ensuring policy predictability, and regulating import volumes are essential steps toward securing Nigeria’s industrial future,” it added.
The economic think tank pointed out that Dangote Refinery and emerging modular refineries are “transformative national assets” that must be safeguarded in line with Nigeria’s long-term economic and strategic goals.
READ ALSO: Dangote Refinery Backs 15% Fuel Import Tax, Pushes Against Substandard Products
“Strengthening refining capacity and moderating fuel prices are not mutually exclusive. With the right policy mix, including fiscal incentives, logistics support, transparent pricing, and guided importation, Nigeria can achieve both goals simultaneously,” it added.
While noting that domestic refineries are expected to meet national demand within a certain period, the centre stated that temporary supply gaps should be addressed not by removing measures that protect local producers, but through what it described as guided, quota-based importation to supplement domestic output.
While calling for the reinstatement of the 15 per cent import tariff, Yusuf said local manufacturers, with all the challenges in the domestic business environment, cannot favourably compete with cheap imports that come from countries with duty-free policies.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X
