President Bola Tinubu.
Minister for Petroleum
By Ifeanyi Nwegbu
The Federal Government has stepped back from implementing the proposed 15 percent ad valorem duty on imported petrol and diesel, a measure earlier approved by President Bola Ahmed Tinubu as part of ongoing fiscal and energy reforms. The Nigerian Midstream and Downstream Petroleum Regulatory Authority confirmed that the duty is no longer in view for the moment after industry operators and civil society groups raised concerns about timing and economic impact.
The duty, calculated as 15 percent of the cost, insurance and freight value of imported fuel, was expected to take effect before the end of the year. Economic projections showed that the measure could increase the average pump price of petrol by between ninety and one hundred naira per litre. This would push the national average price from the current level of about nine hundred and twenty eight naira and place additional pressure on transport operators, small businesses and households.
The policy was designed to encourage the use of locally refined products and reduce the country’s reliance on imported fuel. Nigeria currently depends heavily on imports despite the commencement of operations at the Dangote Refinery which has a nameplate capacity of six hundred and fifty thousand barrels per day. The government had expected the duty to discourage fuel importation, cut foreign exchange spending and improve revenue inflow.
Industry analysts noted that the import levy could have generated several billions of naira each month for the federal purse. However, economists warned that the immediate effect on the cost of living would be severe. Transport fares were projected to rise by up to eighteen percent while logistics and goods delivery costs were expected to increase by about fifteen percent. Inflation, which is already above thirty one percent, could also worsen as fuel prices influence food distribution, manufacturing, and general market activity.
Several business groups, including the Lagos Chamber of Commerce and Industry and associations representing small business owners, expressed concern that domestic refining capacity may not yet be strong enough to shoulder the national demand. They argued that introducing the duty too early could create supply gaps, trigger panic buying and escalate fuel prices.
Civil society organisations offered a different view. The Nigerian Coalition of Civil Society Organisations criticised the suspension and said it undermines Nigeria’s long term refinery development goals. The group insisted that the duty would have encouraged greater consumption of local products while protecting domestic investors from unfair competition.
Despite these contrasting opinions, government officials maintain that the suspension is temporary and strategic. Authorities said the deferment will allow the energy market to stabilise and provide room for further consultation among key stakeholders. They also assured the public that fuel supply remains steady and that there is no immediate threat of scarcity.
With the announcement now made, attention turns to what the government intends to do next. Industry watchers expect further meetings between government agencies, marketers and refinery operators to decide whether the duty will be introduced in early 2026, gradually phased in, or replaced with another fiscal measure.
For now, Nigerians receive short term relief from a potential rise in pump prices while the broader debate continues over how to balance affordability with the push for stronger domestic refining.
