Oil Marketers decry 15% petrol import duty as anti-deregulation policy

Oil marketers are strongly criticizing the Federal Government's proposal to levy a 15% import duty on petrol, arguing that the policy fundamentally contravenes the spirit of deregulation in the downstream petroleum sector. They warn the new duty will inevitably lead to an increase in pump prices for consumers.

Speaking on behalf of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Public Relations Officer, Chief Chinedu Ukadike condemned the proposed duty as anti-competitive.

He emphasized that genuine deregulation dictates that market forces of demand and supply, not additional government taxes, should determine petrol prices.

Ukadike cautioned that the duty could reintroduce market instability, potentially triggering scarcity and profiteering.

He stressed that imported petrol remains necessary to bridge the supply gap left by domestic refineries that have yet to meet national consumption needs.

The IPMAN Spokesperson also expressed concern that the duty could effectively force marketers to rely exclusively on the Dangote Refinery for supply, potentially creating a monopoly that reintroduces the very issues of racketeering and high costs that deregulation was intended to eliminate.

Conversely, energy economist Professor Wumi Iledare backed the government's proposal, labeling the tariff as a transformative step crucial for achieving fiscal resilience and energy security.

He argued that the debate has been dominated by emotion rather than sound economic reasoning, stressing that tariffs are standard fiscal tools designed to promote domestic capacity and stabilize markets.

Professor Iledare clarified that the policy is not a measure to protect inefficiency but rather aims to boost local refining and reduce Nigeria's prolonged dependence on imported fuel.

He described the goal as transform before transition strengthening local capacity within a competitive framework.

However, he stressed that the policy's success hinges on governance integrity and urged regulatory bodies like the NMDPRA, NUPRC, and the Competition Commission to ensure fair competition and transparency.

The Major Energy Marketers Association of Nigeria (MEMAN) estimated the impact of the proposed duty, calculating that the tariff amounts to approximately N99.72 per litre. This levy could potentially drive the retail price of petrol in Lagos to around N964.72 per litre.

Analysts and marketers warn that while advocates see the tariff as protecting local refineries, a move reportedly lobbied for by the Dangote Refinery to compete with cheaper imported alternatives, particularly from Russia, it risks further weakening demand in Nigeria’s price-sensitive market.

Following the subsidy removal, Nigeria’s petrol consumption has already dropped significantly, from about 420,000 barrels per day in 2022 to 280,000 barrels per day in 2024, despite the Dangote Refinery’s daily production of up to 20 million litres.