FG suspension of 15% import duty threatens domestic refining, energy security - CPPE

By Seun Ibiyemi

The Centre for the Promotion of Private Enterprise (CPPE) has warned that the Federal Government’s suspension of the 15 percent import duty on petrol and diesel could undermine Nigeria’s domestic refining capacity, weaken investor confidence, and expose the economy to renewed energy vulnerabilities. 

This was contained in a policy brief released on Sunday by the organisation’s CEO, Dr. Muda Yusuf.

According to the CPPE, the import duty originally introduced to protect emerging private refineries and encourage long-term investment remains essential for sustaining Nigeria’s drive toward energy independence and industrial development. 

The group noted that investors, including the Dangote Refinery and modular refinery operators, committed billions of dollars based on assurances of policy stability.

The brief cautioned that removing the duty risks placing local refiners at a structural disadvantage, as they already grapple with high energy costs, poor infrastructure, logistics bottlenecks, high financing costs and security concerns. 

In contrast, foreign importers operate under far more favourable conditions, enabling them to land products at cheaper rates and distort competition.

CPPE further warned that increased reliance on imported petroleum products could worsen pressure on the naira, heighten inflation, deepen balance-of-payments challenges, and negatively impact Nigeria’s macroeconomic stability. It added that unrestrained imports would export jobs and industrial opportunities to foreign economies, weakening Nigeria’s petrochemical, logistics, and engineering value chains.

On energy security, the organisation noted that returning to import dependence reopens Nigeria to global price shocks, geopolitical disruptions, and supply uncertainties conditions that previously destabilised the downstream sector and contributed to the collapse of state-owned refineries.

To avert these risks, the CPPE recommended the immediate reinstatement of the 15 percent duty and the introduction of targeted incentives for local refiners, including reduced port charges, tax rebates, guaranteed crude supply and improved transport and storage infrastructure. 

It also called for stronger policy predictability and a regulated import quota system to manage temporary supply gaps without undermining domestic producers.

The policy brief stressed that safeguarding domestic refining is crucial for Nigeria’s economic sovereignty, job creation, industrialisation and long-term competitiveness. It urged the government to prioritise the protection of strategic national assets such as the Dangote Refinery and emerging modular refineries, describing them as central to the country’s industrial future.