Nigeria Imposes 15% Import Duty on Petrol and Diesel to Boost Local Refining

Presidential Approval for New Import Tariff

President Bola Tinubu of Nigeria has officially approved a 15% ad-valorem import duty on Premium Motor Spirit (PMS), commonly known as petrol, and diesel. The directive, dated October 21, 2025, was made public around October 30, 2025, and is set to take effect following a 30-day transition window, expected to conclude around November 21, 2025. This move is part of a new 'market-responsive import tariff framework' designed to reshape Nigeria's energy sector.

Strategic Objectives and Rationale

The primary objective behind the introduction of this import duty is to bolster Nigeria's energy security and support the growth of local refining capacity. According to the government, the tariff aims to align import costs with domestic realities and operationalize crude transactions in local currency. FIRS Chairman Zacch Adedeji, whose proposal led to the President's approval, stated that the initiative is 'not revenue-driven but corrective', focusing on strengthening local refining capacity and ensuring a stable, affordable supply of petroleum products across Nigeria.

Key reasons cited for the policy include:

• Strengthening local refining capacity and promoting energy security.
• Aligning import costs with domestic market realities.
• Operationalizing crude transactions in local currency.
• Ensuring a stable and affordable supply of petroleum products.
• Protecting domestic producers from unfair pricing practices and collusion.

The legal framework for this policy is rooted in Sections 71 and 72 of the Petroleum Industry Act (PIA), which empower the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to issue regulations concerning public service obligations related to security of supply and economic development.

Projected Impact and Stakeholder Reactions

The new 15% import duty, applied to the Cost, Insurance, and Freight (CIF) value, is projected to increase the landing cost of petrol by approximately N99.72 per litre. Despite this, estimated Lagos pump prices are expected to remain around N964.72 per litre ($0.62), which is still lower than in neighboring countries such as Senegal, Côte d'Ivoire, and Ghana.

The policy has elicited mixed reactions. While the government, through Special Adviser Sunday Dare, describes it as 'a bridge, not a burden' aimed at transforming Nigeria's petroleum landscape, critics warn of potential price hikes, with some suggesting pump prices could exceed N1,000 per litre.

The Crude Oil Refinery Owners Association of Nigeria (CORAN), represented by Chairman Momoh Oyarekhua, has endorsed the policy, viewing it as a strategic move to boost local refineries, ease foreign exchange pressure, and create jobs. Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) supports the duty but has urged the Nigerian National Petroleum Company Limited (NNPCL) to fast-track the reopening of the country's refineries before December to avert potential fuel scarcity and price increases during the festive season.

Concerns have also been raised that the policy might inadvertently favor large local refiners, such as the Dangote Refinery, which some stakeholders suggest could gain a significant advantage over independent importers, particularly if it operates under an Export Processing Zone (EPZ) classification.