Interestingly, we’ve gone down this road before and done this song and dance in the past with the protectionist policy implemented in the cement industry after the government banned import of the commodity to protect local producers leaving Nigerians at the mercy of greedy, ruthless and rapacious industrialists. We all see how that has panned out for Nigerians.
On Thursday, President Bola Tinubu approved a 15 per cent ad valorem import duty on automotive gas oil (diesel) and premium motor spirit (PMS), also known as petrol. The approval was sequel to a request by following a request by the Federal Inland Revenue Service (FIRS) to apply the 15 per cent duty on the cost, insurance and freight (CIF) to align import costs to domestic realities.
Tinubu’s approval of the request was contained in a memo dated October 21, 2025, from the office of the private secretary to the president, Damilotun Aderemi. Lateef Fagbemi, Executive Chairman of FIRS, Zacch Adedeji, and the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
With 15% import tariff implementation of which is expected to start immediately, Nigerians, who are already grappling with runaway inflation and crushing cost of living crisis, which are mainly caused by the removal of subsidy on petrol leading to high cost of energy and devaluation of the naira, will now be forced to pay more for petrol and diesel which are the main sources of energy that power the Nigerian economy. According to the document detailing the tariff implementation framework, it is stated that the impact will not exceed N100 per litre. But the reality here is that Nigerians may pay as much as N150 more per litre of petrol and more than that on diesel.
According to the document chronicling the framework on the “measured import tariff’ on Premium Motor Spirit (PMS) and Diesel, the policy was aimed at reinforcing national energy security, safeguarding local refining capacity, stabilising the downstream market, and ensuring a fair and competitive pricing environment aligned with the President’s agenda.
While the federal government must strengthen the economy through the promulgation of policies that support local business interests, in this case, protecting local refiners and ensuring sufficiency in local refining capacity, we must be cautious not to create a condition where protectionism becomes a monopoly. The aim of the policy is to discourage the importation of products we can produce here in Nigeria, which is good on paper, but in this particular case, it is both precarious and ill-timed.
Also, the government needs to make up its mind on what it really wants and how it intends to manage the nation’s economy. It cannot, in one breath, parrot deregulation and open and free market, and later turn around to implement policies that are anathema to the basic precept of an open market economy. The essence of deregulating the petroleum sector is to let market forces determine prices, make the market competitive and let buyers choose from an array of options while the government plays little or no role in the activities of the market.
It must be stated here and now that the majority of Nigerians support local refining of crude oil and want importation of refined petrol and diesel reduced to the barest minimum or outrightly banned. What they are, however, against is having a situation where competition is eliminated and the nation is left at the mercy of one refinery operator who will be free to fix any price it wants. Dangote, who enjoys a lot of incentives and massive government support across his conglomerate at the expense of Nigerians, will be the biggest beneficiary of this ill-advised, unnecessary and abhorrent policy. The blowback and consequences of this decision will be devastating to many Nigerians who are already groaning under the crushing weight of runaway inflation.
Currently, the landing cost of import is N840, while the Dangote depot rate is at N877. What is then the rationale behind imposing a 15% import tariff on the cheaper option so that Nigerians consume the more expensive one? We get that the government is trying to protect local refineries, but should that be done at the expense of Nigerians, who will be forced to pay more for fuel because they are restricted to one seller who refines locally? This seemingly minor policy shift will trigger a chain reaction: fuel costs rise, transport costs follow, and inflation surges.
Even worth mentioning here is that, from getting crude directly from the NNPC to being granted all sorts of tax breaks, the Dangote refinery has received a lot of backing from the government which should ordinarily put it ahead of importers by way of market share and pricing, but somehow the refinery still struggles to compete with importers of refined crude oil who, in addition to other costs, will also incur freight cost. The ideal and reasonable thing to do is to let Dangote and the importers slug it out and compete on an equal footing without preferential treatment or undue advantage to anyone, after all, that is the hallmark and guiding principle of a free market economy, and it is what deregulation is designed to achieve. Let the market (i.e., consumers) decide what they want. If your product is what they want, fine. If it is not what they want, they go for their preference.
Furthermore, if the objective of the government is to encourage local refining, then it should make the environment conducive for producing locally. People will invest in local refineries if the conditions are right and the business milieu is favourable to their investment without being blackmailed or strong-armed. If the government wants to protect our local refiners, the right thing to do is to create an environment where they can be competitive. Banning imports is not ‘protecting local refiners’, it is impoverishing the masses.
Interestingly, we’ve gone down this road before and done this song and dance in the past with the protectionist policy implemented in the cement industry after the government banned cement imports to protect local producers leaving Nigerians at the mercy of greedy, ruthless and rapacious industrialists. We all see how that has panned out for Nigerians who are now grappling with the unjustifiable and unreasonably high cost of cement that has seen prices rise by over 400% from N2500 to N10,000 in the space of two years despite the fact that cements are locally produced. This, in turn, has led to astronomical costs in construction, particularly the building of new homes, resulting in an increase in rents while making home ownership a pipe dream for many.
The price gouging that happened in the cement industry will likely happen again in the downstream sector with petrol and diesel after the importers are eased out of the market, and Dangote becomes the only option and sole fixer of price.
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