In a significant policy reversal, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced the suspension of the 15 percent ad-valorem import duty on imported Premium Motor Spirit (PMS), commonly known as petrol, and diesel. This decision comes just weeks after President Bola Ahmed Tinubu approved the duty in October, highlighting the government's responsiveness to stakeholder feedback and economic pressures in the oil and gas sector.
The announcement was made in an official statement signed by George Ene-Ita, the Director of the Public Affairs Department at NMDPRA. The statement, released on the day of the disclosure, emphasized that the implementation of the controversial duty "is no longer in view." This move is poised to alleviate immediate fears of rising fuel prices and inflationary pressures, particularly during a period of heightened demand.
To provide context, the 15 percent import duty was introduced as part of the Federal Government’s broader tariff framework for petroleum products. The primary objective, as articulated by authorities, was to bolster emerging local refineries, including the massive Dangote Petroleum Refinery and various modular plants scattered across the country. By imposing a higher cost on imported fuels, the policy aimed to make domestically refined products more competitive, thereby encouraging investment in local production capacity and generating additional revenue for the government. Proponents argued that this would reduce Nigeria's heavy reliance on fuel imports, which have long strained foreign exchange reserves and contributed to economic volatility.
However, the directive elicited widespread concern and criticism from operators within the oil and gas industry. Stakeholders, including importers, marketers, and consumer advocacy groups, warned that the duty could exacerbate inflation, already a pressing issue in Nigeria's economy. With domestic refineries such as the state-owned Port Harcourt, Warri, and Kaduna plants still operating below full capacity—and in some cases, undergoing rehabilitation—the sudden imposition of the tax was seen as premature. Analysts projected that petrol pump prices could surge by significant margins, potentially pushing the cost per liter beyond affordable levels for the average Nigerian. Diesel, a critical fuel for transportation, power generation, and industrial activities, would similarly face upward price pressures, ripple effects that could cascade through supply chains and increase the cost of goods and services nationwide.
The timing of the policy added to the unease. Nigeria is currently navigating a peak demand period, influenced by seasonal factors, festive seasons, and ongoing economic recovery efforts post-subsidy removal. The partial deregulation of the petroleum sector earlier in the year had already led to volatile pricing, and the new duty threatened to compound these challenges. Industry voices, through associations like the Major Oil Marketers Association of Nigeria (MOMAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), had vocally opposed the measure, petitioning the government and highlighting the risk of supply disruptions if importers scaled back operations due to heightened costs.
In light of these reactions, the NMDPRA's suspension represents a pragmatic pivot. The authority reassured the public of adequate petroleum product supply across the nation, stating that levels remain within the "acceptable national sufficiency threshold" even amid peak demand. "There is robust domestic supply of petroleum products (AGO, PMS, LPG etc.) sourced from both local refineries and importation to ensure timely replenishment of stocks at storage depots and retail stations during this period," the statement read. AGO refers to Automotive Gas Oil, another term for diesel, while LPG denotes Liquefied Petroleum Gas, underscoring the comprehensive monitoring of multiple fuel types.
Furthermore, the NMDPRA issued a stern advisory against malpractices that could undermine market stability. It explicitly cautioned against hoarding, panic buying, or any "non-market reflective escalation of prices" for petroleum products. Such behaviors, the authority noted, could artificially inflate costs and disrupt distribution networks, leading to unnecessary hardships for consumers. This warning is particularly relevant given past instances where speculative actions by marketers have triggered fuel queues and black-market activities.
The regulatory body pledged ongoing vigilance, committing to "closely monitor the supply situation and take appropriate regulatory measures to prevent disruption of supply and distribution of petroleum products across the country, especially during this peak demand period." This includes potential enforcement actions against errant operators and coordination with other agencies to maintain smooth logistics from import terminals to retail outlets.
This development underscores the delicate balance the Nigerian government must strike in its energy policy reforms. President Tinubu's administration has prioritized revitalizing local refining to achieve self-sufficiency, a goal long elusive despite Nigeria's status as Africa's largest oil producer. The Dangote Refinery, with its capacity to process 650,000 barrels per day, is a cornerstone of this vision, expected to commence full operations and supply a significant portion of domestic needs. Modular refineries, smaller-scale facilities licensed to private investors, are also ramping up, though challenges like funding, security in host communities, and technical expertise persist.
The suspension of the duty may provide breathing room for these local initiatives to mature without the immediate backlash of higher import costs. It also aligns with broader economic stabilization efforts, including managing inflation, which has hovered above target levels, and supporting the naira's value in foreign exchange markets. Fuel imports constitute a major drain on forex, and any policy that inadvertently encourages more imports could worsen the balance of payments.
Looking ahead, stakeholders will watch closely for further details on the tariff framework's revision. Will the 15 percent duty be permanently scrapped, or merely deferred until local refineries achieve optimal output? The NMDPRA's statement does not specify a timeline, leaving room for speculation. In the interim, the assurance of robust supply chains—bolstered by contributions from the Nigerian National Petroleum Company Limited (NNPC) and private importers—should help maintain stability at fuel stations.
Consumer reactions are likely to be positive, with many Nigerians expressing relief on social media and in public discourse. Motorists, transporters, and households dependent on generators for power will benefit from potentially stable or lower prices in the short term. However, long-term solutions remain imperative: accelerated rehabilitation of public refineries, incentives for private investment, and transparent pricing mechanisms under the Petroleum Industry Act (PIA).
In conclusion, the NMDPRA's suspension of the 15 percent ad-valorem import duty on PMS and diesel marks a responsive adjustment to industry and public concerns. By prioritizing supply assurance and market discipline during peak demand, the authority aims to foster a stable petroleum downstream sector. This episode highlights the iterative nature of policy-making in Nigeria's complex energy landscape, where economic realities often necessitate flexibility. As the nation pushes toward energy independence, such decisions will play a pivotal role in shaping affordability, inflation trends, and overall economic resilience.
