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The Federal Government’s recent suspension of the planned 15 percent ad valorem tariff on imported Premium Motor Spirit (PMS) has marked a significant pivot in the country’s downstream petroleum policy.
Industry analysts while applauding the decision said it evokes complex questions about market competition, the role of local refineries like the Dangote refinery, and the need to prioritise consumer welfare during periods of high demand like the Christmas festive season.
Initially approved by President Bola Tinubu, the 15 percent import duty was intended to bolster local refining capacity and ensure a steady supply of petroleum products across Nigeria.
However, as reported by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the implementation of the tariff is “no longer in view” following widespread concerns from various quarters about its potential adverse effects on fuel prices and economic stability.
NMDPRA has reassured the public about adequate supply and price monitoring to prevent consumer exploitation during peak demand periods.
Irene David-Arinze, Founder of LIDA Network, commended the government’s decision to rescind the tariff, emphasizing that it reflects the administration’s responsiveness to public concerns, especially the risk of escalating fuel prices ahead of Christmas — a scenario Nigerians notoriously dread given past experiences of long fuel queues and price hikes.
An important cornerstone in this debate is the Dangote refinery, Africa’s largest private oil refinery, championing the government’s local content agenda.
David-Arinze, highlighted the refinery’s leadership in promoting Nigerian-made inputs and local employment as a game changer for the Nigerian downstream sector.
The refinery’s strategy includes sourcing materials locally and partnering with indigenous companies, thus fostering economic activity beyond just fuel refining — across manufacturing, logistics, and technology sectors.
Despite these positives, she cautioned against a monopoly mindset, advocating for fair competition as the cement that will ultimately encourage efficiency and better prices for consumers.
“In some countries, to protect the domestic market and support local producers, tariffs on imports are legitimately increased. We may need to see similar measures with U.S. imports to foster competition. However, the reality in Nigeria is different—where is the competition? We acknowledge and respect the fact that Dangote is a private sector individual, independent of the government. Nigeria has the Dangote refinery as well as our national refinery, which, unfortunately, has not yet reached the capacity to supply the entire nation, as highlighted by today’s groundbreaking developments. This is a welcome progress. Let the competition speak for itself” she said.
The government’s regulatory agencies, notably the NMDPRA, are expected to ensure this competitive balance by monitoring pricing behavior and market dynamics, avoiding any anti-competitive practices that could inflate prices unjustifiably.
Other experts concurred that while Dangote refinery’s capacity has significantly reduced Nigeria’s dependence on imports, there remains a space for multiple players to thrive, preventing any one refinery or entity from monopolistic control.
Akaolisa Osuji, a Public Affairs Analyst, cautioned that the presence of the national refinery, though currently less operational, should be considered in the overall competitive landscape.
Osuji drew attention to international precedents where countries legally impose tariffs to protect domestic producers, thereby nudging competition and improving product quality.
“The United States, for instance, has a system of tariffs that strengthens local industry while keeping imported products competitively priced. For Nigeria, a similar approach requires that local refineries not only scale production, but also operate transparently and competitively” he added.
The Nigerian downstream petroleum market, characterised by a mix of private refineries, importers, and government facilities, is evolving yet still shows signs of concentrated control. Market watchers have noted that international oil companies are gradually divesting, allowing Nigerian-owned entities like Seplat and Oando to localize operations. This transition underscores the need for robust regulatory oversight to mediate fair pricing, prevent hoarding, and maintain product availability.
The NMDPRA remains a pivotal institution in ensuring the downstream sector’s smooth operation. Its responsibilities include monitoring market dynamics, preventing exploitation such as price gouging or product hoarding, and enforcing fair pricing mechanisms.
By managing strategic stock reserves and overseeing the bridging and equalisation fund, NMDPRA also works to stabilise prices across Nigeria’s diverse geography, ensuring remote areas do not suffer unjustly.
The Authority’s commitment to stakeholder engagement and capacity building reflects an understanding that downstream petroleum regulation is not just reactive but proactive, aiming to build a resilient sector aligned with the Petroleum Industry Act 2021’s mandates.
Underlying the technical and regulatory discourse is the paramount concern for Nigerian consumers, for whom petrol pricing is a daily challenge affecting transportation costs, goods prices, and overall livelihoods.
The Christmas period, when fuel demand spikes, has historically shown the worst of fuel scarcity and price hikes in Nigeria’s memory.
David-Arinze’s remarks resonate deeply here, praising the government’s move as a pragmatic response to public outcry.
Avoiding another fuel crisis during Christmas is not only a matter of convenience but an economic necessity to prevent inflationary pressures and social unrest.
Beyond the immediate tariff suspension and local refining efforts, Nigeria’s energy sector is at a crossroads.
At the recent Energy Correspondents Association of Nigeria (ECAN) 2025 Conference in Abuja, industry stakeholders emphasized integrating private sector innovation, advancing renewable energy, and modernizing the grid as critical for long-term sustainability.
John Ofikhenua, Chairman of ECAN, argued the petroleum sector, while still dominant, must operate within a wider ecosystem that balances energy security, economic growth, and environmental considerations.
According to him, there must be deliberate policies to expand the role of local suppliers, SMEs, and industrial parks, supported by institutions like the Nigerian Content Development and Monitoring Board (NCDMB), complement refinery initiatives by deepening industrial value chains.
The ECAN boss noted that these efforts underpin the government’s vision to transform Nigeria from an oil-importing country to a net exporter of refined petroleum products, setting the stage for more competitive pricing and reliable supply.
The removal of the 15 percent import tariff on PMS imports captures a complex interplay of local industry protection, competition, regulatory oversight, and consumer welfare.
Experts like Irene David-Arinze commend the government’s responsiveness and highlight the need for competitive dynamics to be the real drivers of market efficiency, rather than protectionism alone.
The Dangote refinery stands as a beacon of local content success but must operate within a competitive framework to avoid monopolistic pitfalls.
Meanwhile, NMDPRA’s active role assures the public that fairness and supply security remain top priorities.
As Nigeria approaches another festive season, the focus should remain on ensuring fuel availability, stabilising prices, and fostering an environment where local production and fair competition coexist to deliver lasting benefits to the Nigerian economy and its people.
