15% Petrol Import Tax Requires Cautious Implementation -Analysts
Nigeria’s headline inflation rate could reverse from the sustained downward trend as the authority plans 15% on imported fuel. Despite a stable local supply source, Nigerian crude importers maintain their stance to stay in business and continually seek a level playing field.
Despite significant issues facing Nigeria’s refineries, President Bola Tinubu has recently approved a 15% ad valorem import duty on petrol and diesel. The move marked a significant policy shift in Nigeria’s downstream oil sector, according to analysts’ notes.
The measure, which took effect following a presidential directive dated October 21, 2025, is designed to align fuel import pricing with domestic market realities, protect emerging local refineries, and strengthen government fiscal receipts.
Analysts said incessant challenges facing Dangote Refineries from across stakeholder groups despite naira for crude deal with the Nigerian government triggered the new policy.
Some sections of the oil value chain continue to clamour for level playing field that will support petrol imports due to their strain relationship with Dangote Refinery.
In a note, Cowry Asset Limited said at the core of this policy is the administration’s objective to reduce Nigeria’s dependency on imported petroleum products while fostering a competitive environment for domestic refiners.
Despite the commissioning of the 650,000 barrels-per-day Dangote Refinery and multiple modular refineries in Edo, Rivers, and Imo States, imported petrol still accounts for about 67% of national consumption, reflecting structural gaps in local refining and distribution capacity.
“The 15% duty, proposed by the Federal Inland Revenue Service (FIRS) and endorsed by the President, applies to the cost, insurance, and freight (CIF) value of imported petrol and diesel”, Cowry Asset Limited stated in a commentary note
According to estimates contained in the proposal, the tariff could increase the landing cost of petrol by roughly N99.72 per litre, pushing the average pump price toward N985/litre ($0.63).
The amount remains well below the regional averages of $1.76 in Senegal, $1.52 in Côte d’Ivoire, and $1.37 in Ghana, indicating that Nigerian fuel prices will stay regionally competitive despite the adjustment.
“From a fiscal standpoint, this development is consistent with the federal government’s broader revenue mobilisation strategy. The 2025 national budget projects N41.91 trillion in total revenue, with N0.36 trillion expected from oil royalties and N5.67 trillion from value-added and related taxes.
“By imposing import duties on petroleum products, the government aims to diversify fiscal inflows, reduce dependence on volatile oil export earnings, and strengthen the non-oil revenue base”, the investment firm said.
Analysts at Cowry Asset Limited explained that the macroeconomic implications of this measure warrant careful consideration.
“First, the increase in import duties will likely raise pump prices and may reignite inflationary pressures, particularly in the transportation and food segments of the Consumer Price Index (CPI).
“Fuel costs carry a strong pass-through effect in Nigeria’s inflation structure. Although headline inflation has moderated after peaking above 30% in 2024, it remains susceptible to energy price shocks and exchange rate volatility.
“Secondly, while the import duty is intended to create a level playing field for local refiners, its effectiveness depends on the operational readiness and output stability of these refineries”, the firm stated.
Analysts said persistent issues such as crude supply constraints, logistics bottlenecks, and limited access to foreign exchange could delay the expected benefits of the policy.
The risk is that if domestic refining capacity fails to ramp up swiftly, the new tariff may inadvertently raise domestic prices without achieving meaningful import substitution.
From a currency management perspective, the policy could have mixed implications. On one hand, it could curb foreign exchange demand for petroleum imports if local output increases, supporting the naira in the medium term, analysts said.
On the other hand, the short-term rise in fuel costs and associated inflationary pressure could tighten monetary conditions, prompting the Central Bank of Nigeria (CBN) to maintain a restrictive policy stance.
“.. 15% ad-valorem import duty represents a fiscal tightening and industrial protection measure aimed at rebalancing Nigeria’s energy market.
“While it reinforces the government’s energy security and revenue mobilisation agenda, its success will hinge on a sustained increase in local refining throughput, transparent pricing oversight, and policy coordination between fiscal and monetary authorities.
“Unless local refineries scale up production to offset import shortfalls, the tariff’s near-term effect could manifest in higher pump prices and cost-push inflation before the intended structural benefits begin to materialise over the medium term”, Cowry Asset stated. Julius Berger Jumps by 13.3% as Investors Bet on Earnings
