In a heated debate reshaping Nigeria’s downstream petroleum sector, oil marketers have launched a scathing attack on the Federal Government’s plan to impose a 15% import duty on petrol. The Independent Petroleum Marketers Association of Nigeria (IPMAN) and other stakeholders argue that this policy flies in the face of the deregulation agenda, which was meant to liberate the market from government interference. They predict that the duty will inevitably push pump prices higher, burdening already struggling consumers and undoing the fragile stability achieved post-subsidy removal.
Chief Chinedu Ukadike, IPMAN’s Public Relations Officer, didn’t mince words in his condemnation. Speaking exclusively on the proposal, he described it as “fundamentally anti-competitive and a betrayal of deregulation principles.” According to Ukadike, true deregulation means allowing the invisible hand of market forces—demand and supply—to dictate prices, not layering on additional taxes that distort the playing field. “This duty isn’t just a tax; it’s a recipe for disaster,” he warned, highlighting how it could reignite the ghosts of past market instabilities, including artificial scarcities, hoarding, and rampant profiteering by unscrupulous elements.
Ukadike’s concerns extend beyond immediate price implications. He pointed out that Nigeria’s domestic refineries, including the long-awaited Dangote Refinery, are still far from producing enough to satisfy national demand. Imported petrol, therefore, remains a critical lifeline to prevent supply shortages. “Without imports, we’re staring at gaps that could cripple distribution networks,” he explained. More alarmingly, the duty might inadvertently hand a monopoly to the Dangote Refinery, forcing all marketers to source exclusively from this single entity. This, Ukadike argued, would resurrect the very problems deregulation sought to bury: racketeering at loading depots, inflated costs, and a lack of competitive options. “Deregulation was supposed to end the era of one supplier dominating the market. This policy risks bringing it back with a vengeance,” he added.
The Major Energy Marketers Association of Nigeria (MEMAN) has crunched the numbers to quantify the fallout. Their calculations reveal that the 15% duty translates to an additional N99.72 per litre on imported petrol. In practical terms, this could catapult the retail price in Lagos from current levels to approximately N964.72 per litre. For a nation where transportation costs ripple through every sector—from food prices to manufacturing—such an increase isn’t trivial. Marketers emphasize that Nigeria’s market is extraordinarily price-sensitive; even modest hikes can suppress demand and choke economic activity.
Analysts echo these fears, noting that the proposal appears tailored to shield local refineries, particularly Dangote, from cheaper imported alternatives. Reports suggest intense lobbying from the Dangote Refinery camp, which faces stiff competition from low-cost suppliers like Russia. While proponents frame this as protecting nascent domestic capacity, critics see it as protectionism that could backfire. Post-subsidy removal in 2023, petrol consumption has already plummeted from around 420,000 barrels per day in 2022 to a mere 280,000 barrels per day in 2024. This drop occurred despite the Dangote Refinery ramping up to produce up to 20 million litres daily. Imposing duties now, marketers argue, risks further eroding demand, leading to underutilized refineries and a vicious cycle of higher prices chasing lower volumes.
On the other side of the divide stands Professor Wumi Iledare, a respected energy economist, who defends the government’s move with economic rigor. Labeling the tariff a “transformative fiscal instrument,” Iledare contends it’s essential for building Nigeria’s fiscal resilience and long-term energy security. He dismisses much of the opposition as emotionally charged rather than grounded in sound economics. “Tariffs are standard tools worldwide to nurture domestic industries and stabilize volatile markets,” he explained in a recent interview. Far from protecting inefficiency, the policy aims to accelerate local refining capabilities and wean Nigeria off its decades-long addiction to imported fuel.
Iledare’s vision is one of “transform before transition.” He envisions strengthening local capacity within a competitive framework, where tariffs act as temporary bridges rather than permanent crutches. However, he’s quick to caveat that success depends on unflinching governance. Regulatory bodies such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Federal Competition and Consumer Protection Commission must vigilantly enforce fair play. “Without transparency and anti-monopoly safeguards, this could devolve into cronyism,” Iledare warned, urging swift action to prevent any single player from exploiting the system.
The broader context underscores the high stakes. Nigeria’s petroleum sector has been a rollercoaster since the subsidy era ended. Deregulation promised efficiency, competition, and eventual price stability, but challenges persist. Domestic refineries, plagued by years of neglect, still lag in output. The Dangote Refinery, a 650,000-barrel-per-day behemoth, was hailed as a game-changer upon commissioning, yet its integration into the market has been bumpy. Imports, once subsidized and plentiful, now face the full brunt of global prices, exacerbated by naira depreciation and forex volatility.
Marketers like those in IPMAN and MEMAN represent the frontline operators—filling stations, depots, and logistics firms that keep fuel flowing to millions. Their pushback isn’t merely self-interested; it reflects ground-level realities. In rural areas, where IPMAN dominates, a N100-per-litre hike could mean the difference between affordable mobility and stagnation. Urban centers, already grappling with inflation above 30%, would see transport fares soar, inflating commodity prices further.
Government officials have yet to respond in detail, but sources indicate the duty is part of a broader strategy to bolster forex reserves and fund infrastructure. Proponents argue that revenues from the tariff could subsidize refinery upgrades or renewable transitions, creating a virtuous cycle. Critics, however, question the timing and equity. Why burden consumers when local production is ramping up? And how does this align with President Bola Tinubu’s renewed hope agenda, which promised economic relief?
As the policy inches toward implementation, the divide grows stark. Marketers call for dialogue and alternatives, such as incentives for multiple refineries or phased tariffs tied to domestic output milestones. Professor Iledare and like-minded experts push for data-driven implementation, with sunset clauses to prevent perpetual protectionism.
Ultimately, this proposal tests Nigeria’s commitment to deregulation. Will it foster a robust, multi-player market, or revert to controlled chaos? With consumption already down 33% in two years, the margin for error is slim. Consumers, silent in boardrooms but vocal at pumps, will bear the brunt. As debates rage, one thing is clear: the 15% duty isn’t just a line item—it’s a pivot point for Nigeria’s energy future, demanding balanced scrutiny to avoid derailing hard-won reforms.
