To protect local refineries, FG approves 15% import duty on PMS, Diesel

By Olakunle Oke 

To safeguard and strengthen local refining capacity, President Bola Tinubu has approved the introduction of a 15% ad-valorem import duty on petrol and diesel imports into Nigeria.

The new policy, aimed at protecting local refineries and stabilizing the downstream petroleum market, is expected to push up pump prices.

In a letter dated October 21, 2025, and made public on October 30, the President directed the Federal Inland Revenue Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to immediately implement the new tariff. The letter, signed by his Private Secretary, Damilotun Aderemi, followed a proposal submitted by the Executive Chairman of the FIRS, Zacch Adedeji.

Adedeji, in his memo to the President, said the 15 per cent duty calculated on the cost, insurance, and freight (CIF) value of imported petrol and diesel was designed to align import costs with domestic market realities.

He explained that the move was part of broader reforms under the Renewed Hope Agenda to boost local refining, ensure price stability, and strengthen Nigeria’s oil economy through local currency-based transactions.

“The core objective of this initiative is to operationalise crude transactions in local currency, strengthen local refining capacity, and ensure a stable, affordable supply of petroleum products across Nigeria,” Adedeji stated.

The FIRS boss noted that despite improvements in domestic refining, price instability persists due to the gap between import parity pricing and local production costs. He warned that this misalignment has created unfair competition, making it difficult for emerging refineries to recover costs.

“While domestic refining of petrol has begun to increase and diesel sufficiency has been achieved, price instability persists, partly due to the misalignment between local refiners and marketers,” he wrote.

Adedeji stressed that the government’s duty was to protect both consumers and local producers from unfair pricing and collusion, while ensuring a level playing field for refiners to attract more investments.

He added that the new tariff framework would discourage duty-free fuel imports from undercutting local producers and foster a fair, competitive downstream market.

According to projections in the letter, the 15 per cent import duty could raise the landing cost of petrol by about ₦99.72 per litre.

“At current CIF levels, this represents an increment of approximately ₦99.72 per litre, which nudges imported landed costs toward local cost-recovery without choking supply or inflating consumer prices beyond sustainable thresholds,” the document stated.

Even with the adjustment, pump prices in Lagos are projected to remain around ₦964.72 per litre ($0.62), still below regional averages such as Senegal ($1.76), Côte d’Ivoire ($1.52), and Ghana ($1.37).

The policy comes as Nigeria intensifies efforts to reduce dependence on fuel imports and ramp up domestic refining. The 650,000-barrels-per-day Dangote Refinery in Lagos has already commenced diesel and aviation fuel production, while modular refineries in Edo, Rivers, and Imo states are refining petrol on a smaller scale.

Despite these advances, petrol imports still account for about 67% of national demand.