FG Rejects 15% Duty on Imported Fuel, Says Prices Will Soar

A 15% ad-valorem import tax on gasoline and diesel imports into Nigeria has been approved by President Bola Tinubu.

The project aims to increase the cost of imported fuel to help Nigeria’s local refineries by imposing a value-based tax on all fuel imports. This strategy seeks to lessen the nation’s dependency on imported fuel, promote domestic production, and establish a more equitable downstream sector.

Tinubu instructed the Federal Inland Revenue Service and the Nigerian Midstream and Downstream Petroleum Regulatory Authority to implement the tariff immediately as part of what the government referred to as a “market-responsive import tariff framework” in a letter dated October 21, 2025, which was made public on October 30, 2025.

The letter, which was signed by his private secretary, Damilotun Aderemi, expressed the president’s acceptance of a suggestion made by Zacch Adedeji, the Executive Chairman of the FIRS.

In order to bring import costs into line with domestic market realities, the proposal called for the imposition of a 15% tariff on the cost, insurance, and freight value of imported gasoline and diesel.

In accordance with the administration’s Renewed Hope Agenda for energy security and fiscal sustainability, Adedeji clarified in his message to the president that the action was a component of ongoing reforms to support local refining, guarantee price stability, and bolster the naira-based oil economy.

“Operationalizing crude transactions in local currency, strengthening local refining capacity, and ensuring a stable, affordable supply of petroleum products across Nigeria are the core objectives of this initiative,” Adedeji said.

Additionally, the head of FIRS cautioned that market instability has resulted from the current mismatch between locally refined goods and import parity prices.

“Price instability persists, partly due to the misalignment between local refiners and marketers, even though domestic petrol refining has begun to increase and diesel sufficiency has been achieved,” he said.

He pointed out that growing domestic refineries are under pressure because import parity pricing, which serves as the baseline for setting pump prices, frequently falls below cost recovery levels for local manufacturers, especially during foreign exchange and freight fluctuations.

According to Adedeji, the government’s role is now “twofold, to ensure a level playing field for refiners to recover costs and attract investments, while protecting consumers and domestic producers from unfair pricing practices and collusion.”

He contended that a fair and competitive downstream environment would be fostered by the new tariff regime, which would deter duty-free gasoline imports from undercutting domestic manufacturers.

The 15 percent import tariff could raise the landing cost of gasoline by an estimated N99.72 per litre, according to estimations in the letter.

This reflects an increase of around 99.72 per litre at current CIF levels, which pushes imported landed costs toward local cost-recovery without restricting supply or raising consumer prices above sustainable boundaries. The anticipated Lagos pump costs would still be much lower than regional averages like Senegal ($1.76 per litre), Cote d’Ivoire ($1.52 per litre), and Ghana ($1.37 per litre) even after this modification, remaining in the range of N964.72 per litre ($0.62).

The strategy is implemented as Nigeria steps up attempts to increase domestic refining and lessen reliance on imported petroleum products.

While modular refineries in the states of Edo, Rivers, and Imo have begun small-scale petrol refining, the 650,000 barrels-per-day Dangote Refinery in Lagos has started producing diesel and aviation fuel.

But even with these improvements, up to 67% of the country’s petrol needs are still met by imports.