PRESIDENT Bola Tinubu has approved the introduction of a 15 percent ad-valorem import duty on petrol and diesel imports into Nigeria in a move critics say will stifle competition, create monopoly and make fuel more expensive for Nigerians.
According to details of a memo from the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji, to President Bola Tinubu, Nigerians may be forced to pay nearly extra N100 (N99.72) for a litre of petrol. This means petrol may hit N1000 per litre during Christmas of 2025.
In a response to the memo dated October 21, 2025, and addressed to the FIRS and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Mr Tinubu directed immediate implementation of the tariff as part of a “market-responsive import tariff framework,” with a view to “safeguarding local refining capacity, stabilising the downstream market, and ensuring a fair and competitive pricing environment.”
The approved tariff imposes a 15 percent ad-valorem duty on the cost, insurance and freight (CIF) value of imported petrol and diesel at the point of discharge.
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The Nigerian government response memo, signed by Mr Tinubu’s Private Secretary, Mr Damilotun Aderemi, claimed that the introduction of the duty was not targeted at raising revenue but was meant to align import costs “with domestic realities while preserving affordability.”
The FIRS executive chairmam had argued that the current misalignment between locally refined products and import parity pricing had created instability in the market. He had also posited that import parity pricing usually fell below cost recovery levels for local producers during foreign exchange and freight fluctuations, piling pressure on emerging domestic refineries.
He convinced President Tinubu that there was no better time to impose the duty on petrol and diesel imports than now.
“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 had written.
‘The government’s responsibility is now twofold, to protect consumers and domestic producers from unfair pricing practices and collusion, while ensuring a level playing field for refiners to recover costs and attract investments.”
Mr Adedeji further argued that the core objective of this initiative was to operationalise crude transactions in local currency, strengthen local refining capacity, and ensure a stable, affordable supply of petroleum products across Nigeria.
He projected that the 15 percent import duty could raise the landing cost of petrol by an estimated N99.72 per litre. Payments of the tax will be made into a specified government account, which will be monitored by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
“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. Even with this adjustment, estimated Lagos pump prices would remain in the range of N964.72 per litre ($0.62), still significantly below regional averages such as Senegal ($1.76 per litre), Cote d’Ivoire ($1.52 per litre), and Ghana ($1.37 per litre).”
Industry players say the policy is backed by the Petroleum Industry Act (PIA). According to our findings, the policy will take effect after a 30-day transition period.
Analysts say tariff is in bad taste
Economists and petrol experts say the new tariff on petrol and diesel will raise the price of petrol products, noting that it will create monopoly in the industry and stifle competition.
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Nigeria imports about 60 percent of its refined petroleum products, while about 40 percent comes from local refineries, almost solely from the Dangote Petroleum Refinery.
“First, it will raise the cost of petrol at this time when the cost of living is extremely higher,” said a United Kingdom-based finance lecturer, Dr Matthew Onyemaechi.
“It will have an adverse effect on inflation, which is now decelerating. So, I do not understand why Nigeria is now adopting a protectionist policy when the industry should be thrown open to encourage competition. When you have competition, prices will fall, or at least, remain at equilibrium points. But when you leave the market to one player, you won’t even know what the true price should be,” he added.
Nigerians are going through harrowing experiences due to high inflation and reform-fuelled cost-of-living crisis. The World Bank said in its ‘Nigeria Development Update’ released in early October that though growth had picked up and revenues and reserves rising, poverty was skyrocketing in Africa’s most populous nation.
“In 2025 we estimate that 139 million Nigerians live in poverty. So the challenge is clear, how to translate the gains from the stabilisation reforms into better living standards for all,” said World Bank’s Country Director, Mr Mathew Verghis.
Economists say the new policy may look good on paper but could have negative consequences. A university teacher of economics in a South-West University, Dr Oluwadare Olumuyiwa, said he was worried about the effect on competition.
“The first duty of the government is to protect everyone. When you protect an entity over citizens, you have failed in your duty as the government. This particular policy will discourage market fairness and shut down a number of marketing companies. The effect it will have on inflation should also be studied.”
