President Bola Tinubu has authorised a new fiscal intervention. It includes the immediate introduction of a 15 per cent ad valorem import duty on petrol and diesel. The administration says this is designed to protect nascent domestic refining capacity. It also aims to stabilise a volatile downstream market.
The approval is signed off in a presidential letter dated 21 October 2025. It was publicly reported on 30 October 2025. The letter directs the Federal Inland Revenue Service and the Nigerian Midstream and Downstream Petroleum Regulatory Authority to implement what the government terms a “market-responsive import tariff framework.”
At face value the policy answers a real policy dilemma. Nigeria has for decades been an importer of refined products despite being a major crude producer.
The policy now attempts to tilt margins back toward local processors. It does this by raising the landed cost of imports. This cost is calculated on a cost, insurance, and freight (CIF) basis.
The FIRS memo underpinned the President’s decision. It was prepared by Executive Chairman Zacch Adedeji. The memo estimates the 15 per cent duty will add roughly N99.72 per litre to the landing cost of petrol.
That incremental cost aims to nudge import parity prices closer to local cost recovery for domestic refiners. It does so without choking supply.
This is not an ideological experiment. It is a defensive measure for industrial investors who have committed very large sums to refining capacity in Nigeria.
The 650,000 barrels per day Dangote refinery in Lagos is Africa’s largest single private refining complex. It has already begun commercial output of diesel and aviation fuel. It has also started to process petrol.
The refinery’s scale and the pace of its commissioning have altered the downstream calculus. Nonetheless, imports have not yet been obviated. They continue to account for a significant share of national supply.
The Dangote project and its expansion plans place the state under political pressure. This pressure is to protect a domestic asset. The asset promises jobs, foreign exchange savings, and industrial linkages.
What the numbers say
According to the document obtained by this correspondent, the 15 per cent ad valorem charge is calculated on CIF values. At current CIF levels, this charge would add about N99.72 to every litre of imported petrol.
The memo projects a Lagos pump price in the range of N964.72 per litre after the duty is applied. The administration argues that this price would stay below many regional benchmarks, citing fuel prices in Senegal (about $1.76 per litre), Côte d’Ivoire (about $1.52) and Ghana (about $1.37).
Two important caveats must be underscored.
First, any naira-priced projection is sensitive to the exchange rate used to convert landed cost. It is also sensitive to the variability of freight and crude markets.
On 30 October 2025, mid-market foreign exchange sources placed the dollar at roughly ₦1,452–₦1,455, meaning that the stated N964.72 converts to about $0.66 per litre rather than $0.62 depending on the rate and timing used by analysts.
The Administration’s dollar figure thus depends on the exchange assumption baked into the memo.
Second, estimates of the share of domestic demand met by imports vary by dataset and period.
Recent reporting indicates that imported petrol still accounts for between roughly 63 per cent and 69 per cent of national consumption. This depends on the time window used. It also varies based on whether the analysis measures volumes or days of coverage.
Domestic production has risen. But, imports stay a material part of supply. Any tariff that raises landed prices will interact with that continuing import reliance.
Who benefits and who loses
The beneficiaries are obvious. Domestic refiners, notably Dangote, will become more competitive. A growing set of modular refineries in Edo, Rivers, and Imo will also see their output as relatively more competitive against duty-bearing imports.
Higher landed prices reduce the incentive for duty free or low-margin imports to undercut local producers.
In theory, the tariff will improve the margin environment for local refineries. It will encourage further capital flows into refining. Additionally, it will strengthen crude transactions denominated in naira as the memo recommends.
The immediate losers are consumers and politically sensitive industrial users reliant on road transport and diesel. Retail pump prices are likely to climb in cities and in the transport corridors that underpin trade and food distribution.
For households already coping with inflation and high energy costs, any rise in pump prices will be felt quickly. There is also a macro angle.
Higher pump prices can impact transport, manufacturing, and food prices. This effect adds to inflationary pressure. It also complicates monetary policy.
These secondary effects must be accounted for when claiming the duty is merely “corrective” rather than revenue generating.
Market mechanics and enforcement risks
The efficacy of the tariff depends on enforcement at the ports. It also relies on preventing evasion through mis-valuation. Additionally, transhipment via neighbouring markets must be prevented.
Nigeria’s porous trade routes and the sophistication of some traders pose challenges. These factors mean that an import duty creates a price wedge. This situation encourages avoidance behaviour unless customs, ports, and tax authorities act decisively.
The FIRS and the petroleum regulator will need to coordinate closely with the Central Bank. This coordination is necessary to limit circumvention. It is also essential to guarantee the tariff does not simply become a tax on consumers. The goal is to avoid failure in boosting local refining utilisation.
There is also the timing problem. The duty will have the largest effect if domestic refineries can increase output rapidly. They will absorb market share as imports become costlier.
If supply bottlenecks occur, the tariff risks raising prices without delivering the promised shift to domestic supply.
Political economy and communications
This policy sits at the intersection of industrial policy and political risk. The ruling administration must communicate clearly that the duty is calibrated to protect strategic capacity. It should be clear that revenue is not the primary motive.
Yet even defensive tariffs are political liabilities because voters see them as cost increases.
The executive will need allies in the National Assembly and the party. This support is crucial to shield the measure from populist pushback. They will also need to explain transitional subsidies or targeted relief for vulnerable groups, if necessary.
Comparative and historical perspective
Nigeria has experimented with trade and fiscal measures to support local industry before with mixed results. The difference now is scale.
The presence of a mega-refinery like Dangote’s changes the stakes and magnifies the potential national gains from import substitution.
Historically, protection without competitiveness reforms produced winners close to political power and losers in the broader economy.
To avoid repeating that pattern, the government must pair tariffs with transparent monitoring. It should set credible timelines for domestic ramp up. Additionally, mechanisms must be in place to protect low-income households from sudden price shocks.
Policy options and recommendations
1. Phased implementation and monitoring. Introduce the duty with a clear schedule tied to measurable increases in domestic refined output and availability metrics.
2. Targeted relief. Consider targeted fuel support for public transport and food distribution networks while the domestic supply base scales.
3. Tight customs controls. Implement robust CIF verification and port checks to limit mis-invoicing and transhipment.
4. Transparent exchange rate assumptions. Publish the exchange rate and CIF assumptions used to derive projected pump prices so analysts and consumers can judge credibility.
5. Independent oversight. Set up an independent monitoring panel that reports monthly on import volumes, domestic refinery utilisation and price pass-through.
Final thoughts
President Tinubu’s 15 per cent import duty on petrol and diesel is a blunt instrument. It is aimed at correcting a long-standing market distortion. This distortion penalises domestic refining investment.
It is economically defensible if implemented transparently, enforced strictly, and matched with supply assurances from local refiners. But, there are real short-term costs for consumers. Risks for inflation and competitiveness exist if supply gaps persist or if enforcement falters.
The coming weeks will show whether Nigeria can convert a defensive tariff into a credible, durable pivot to an industrialised downstream sector. Alternatively, the cost may be paid chiefly at the pumps and on household budgets.
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