Tinubu’s 15% Fuel Import Duty: Balancing Energy Security, Refining Revival, and Inflation Risks
President Bola Ahmed Tinubu’s approval of a 15% import duty on petrol and diesel marks one of the most consequential energy policy shifts in recent years. While the Federal Government frames it as a strategic move to stimulate domestic refining, strengthen energy security, and stabilise the naira, many analysts warn it could ignite a new round of inflation and deepen cost-of-living pressures.
The policy, formalised through a presidential directive to the Attorney-General of the Federation, the Federal Inland Revenue Service (FIRS), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), introduces a 30-day transition window for importers to adjust cargoes already in transit.
A Corrective Tax, Not a Cash Grab — FIRS’ Strategic Rationale
According to FIRS Chairman Zacch Adedeji, the 15% Fuel Import Duty is not a revenue-raising measure but a market-correction mechanism to align fuel import costs with domestic refining realities.
Adedeji argued that the wide price gap between imported and locally refined fuel undermines market stability, deters refinery investment, and perpetuates dollar-denominated trade. By applying the 15% tariff to the Cost, Insurance, and Freight (CIF) value, the government expects to boost domestic competitiveness while maintaining price parity with regional peers.
“This initiative is not about revenue—it’s about balance,” Adedeji stated. “It operationalises crude transactions in naira, strengthens local refining, and ensures a stable, affordable fuel supply aligned with the Renewed Hope Agenda.”
Even with the tariff, Lagos petrol prices are projected to remain near ₦964.72 per litre ($0.62)—still lower than pump prices in Senegal, Côte d’Ivoire, and Ghana.
The Bigger Picture — Supporting Dangote and Domestic Refining
At the heart of the debate is the Dangote Refinery, currently Nigeria’s only major operational refinery, which has become central to the country’s transition from import dependency to local production.
Government insiders say the 15% Fuel Import Duty tariff aims to protect domestic refiners from under-priced imports, ensuring that imported petrol does not undercut locally produced volumes. The move, they insist, aligns with global best practices, where countries impose import tariffs to support local manufacturing and job creation.
However, critics argue that the measure could entrench market concentration, giving the Dangote Refinery an outsized competitive edge. Nigeria still imports about 15–20% of its petrol needs, and many fear the tariff could push prices higher before domestic supply stabilises.
Market Response — Inflation Fears vs. Energy Independence
Industry experts are sharply divided on the implications.
Dr. Ayodele Oni, Partner at Bloomfield Law Practice, warns that the 15% levy will “inevitably raise the landing cost of fuel,” which marketers will pass to consumers in a deregulated market.
“While the policy supports domestic refining, without full refining capacity, it risks fuelling inflation and triggering scarcity,” Oni said.
He cautioned that with over 60% of Nigeria’s fuel still imported, higher tariffs could choke smaller independent marketers, reduce competition, and increase liquidity pressures in the downstream sector.
Conversely, Dr. Billy Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), hailed the move as a strategic long-term play.
“Yes, prices may rise temporarily, but this policy will create jobs, strengthen the naira, and eventually deliver energy security,” Harry said, urging the NMDPRA to regulate the market to prevent monopolies.
The Economic and Political Fallout — Mixed Reactions
Not everyone is convinced. The African Democratic Congress (ADC) condemned the 15% Fuel Import Duty policy as “insensitive” and warned it could push pump prices beyond ₦1,000 per litre, worsening the economic hardship triggered by subsidy removal and currency devaluation.
The party criticised what it described as a “trial-and-error economic model,” arguing that Nigeria lacks sufficient refining capacity to justify the tax. It demanded the immediate suspension of the duty, citing ongoing losses at the government-owned Port Harcourt Refinery, despite its $1.5 billion rehabilitation.
In contrast, respected economist Bismarck Rewane, CEO of Financial Derivatives Company, defended the duty as a necessary protectionist tool.
“Every time you import, you’re exporting jobs. Import tariffs, if well-managed, encourage domestic production and build industrial capacity,” Rewane said.
He added that the long-term benefits—job retention, currency stability, and fiscal sustainability—far outweigh short-term pain.
Structural Reality — Can Local Refineries Meet Demand?
Nigeria’s refining infrastructure remains the elephant in the room.
- Dangote Refinery, with a 650,000-barrel-per-day capacity, has begun limited operations but is still ramping up output.
- Government-owned refineries in Port Harcourt, Warri, and Kaduna remain largely non-functional, despite billions in rehabilitation spending.
- Industry data shows that 69% of Nigeria’s petrol is still imported, leaving a substantial supply gap.
Without full local production, higher import duties could create a dual-pressure effect—raising both imported and locally refined fuel prices simultaneously. Analysts warn that this could erode consumer purchasing power, accelerate inflation beyond 30%, and strain small businesses already reeling from high logistics costs.
The BRANDECONOMY ANALYSIS — Reform, Risk, and Reality
From a macroeconomic perspective, Tinubu’s 15% import duty represents a bold but high-risk recalibration of Nigeria’s downstream energy strategy.
Potential Upsides:
✅ Encourages local refining and domestic job creation.
✅ Reduces forex demand by promoting crude-for-naira transactions.
✅ Enhances national energy security.
✅ Attracts investment into the midstream and downstream value chain.
Key Risks:
⚠️ Short-term inflationary pressure and possible fuel scarcity.
⚠️ Potential market concentration around Dangote Refinery.
⚠️ Weak enforcement and infrastructure bottlenecks could derail intended benefits.
⚠️ Risk of social backlash amid fragile consumer sentiment.
To mitigate these risks, analysts urge the government to complement the tariff policy with structural enablers—including better pipeline infrastructure, transparent crude allocation, and incentives for modular refineries.
The Bottom Line: Tariff or Transition?
The 15% import duty on petrol and diesel is a defining policy of Nigeria’s post-subsidy energy era—a move that straddles the fine line between economic nationalism and market pragmatism.
If managed transparently and backed by robust refinery output, the policy could herald Nigeria’s long-awaited refining renaissance. But if implemented hastily without adequate domestic capacity, it risks becoming another inflationary burden on already-strained Nigerians.
For now, the clock is ticking on the government’s 30-day rollout plan—one that will test the Tinubu administration’s resolve to balance industrial protection with public welfare.
