15% Import Duty: Balancing consumer relief with national energy security

By : Editorial Board

Date: 1 December 2025 6:45am WAT

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Lagos Seaport

Lagos Seaport

The suspension of the planned 15 per cent import duty on petroleum products may calm public anxiety, but the decision exposes a troubling weakness at the heart of Nigeria’s economic management – the inability to stay committed to long-term reform and involve stakeholders in critical decision-making.

The suspension, announced by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) amid public outcry over the imposition, was implemented to ensure an adequate supply during the holiday season and prevent price increases. Whereas the duty was initially approved to boost local refining, its suspension could prevent potential price hikes and supply concerns that oil marketers and experts raised.

The ad valorem tax was originally introduced to make imported fuel less competitive, encourage local refining and reduce Nigeria’s reliance on imports. As expected, it was received with stiff opposition, with marketers and industry experts warning it would disrupt the supply chain, trigger a shortage and, most importantly, increase the already high pump prices of fuel. For a sector notorious for supply crisis and price volatility, which have increased by over 350 per cent since President Bola Tinubu assumed office, these were real concerns.

There is no question that Nigerians are weary. Rising living costs, volatile fuel prices and fragile purchasing power make any prospect of additional burden unbearable. Hence, shelving the duty offers immediate political and social relief. It prevents an uptick in pump prices, wards off inflationary pressure and stops the kind of public panic that often destabilises the downstream sector.

Despite the justification, the decision deserves deeper and sober reflection. While the suspension offers immediate relief to cash-strapped consumers, the suspension raises tough questions about the country’s long-term energy strategy, its industrial ambitions and the consistency of its economic policy environment.

Short-term comfort must not blind the country to the deeper consequences of this policy retreat. Such a decision, like other previous similar reversals, portrays the country’s regulators as inconsistent and makes the market unstable. These detract from the current economic reforms and uptick in investor confidence that has increased the country’s rating.

Nigeria must be consistent with its business-ready message. It cannot do this with a consistent policy flip-flop and portraying the economy as unstable, not in a strategic sector like the midstream sector, where the country is in dire need of fresh investment to unlock.

For emphasis, the import duty was never merely a revenue measure. It was conceived as part of a broader strategy to encourage domestic refining, reduce import dependence and conserve foreign exchange. By suspending it, the government risks weakening investor confidence in ongoing local refining projects and keeping Nigeria trapped in the costly cycle of importing what it has the capacity to produce locally. Worse still, it signals policy inconsistency in a sector that demands predictability and long-term planning.

Nigeria cannot claim to seek energy self-sufficiency on one hand while creating conditions that favour importers over domestic refiners. It can neither hope to stabilise the naira while expanding the country’s fuel import bill. Every policy reversal deepens uncertainty, discourages investment and prolongs the country’s dependence on volatile global markets.

Despite Nigeria’s high returns on investment, the country struggles to attract and retain investment, while its peers naturally have their ways. This is directly attributable to rising uncertainty, a variable that investors cannot model for planning purposes. To reduce this burden, regulators should henceforth embark on far-reaching consultation and go for policy options that can stand the test of time and stand by their choices rather than buckling to political interest and populist positions.

The suspension announcement does not in any way suggest controversy is over. The authority needs to come up with a more definite position on it and the different issues that have been raised. If the government believes the duty poses hardship, it should redesign —not discard — the policy. A phased or moderated approach, backed by clear timelines, consumer safeguards and transparent stakeholder engagement, would protect citizens without derailing its local protection goal or industrial progress.

More importantly, the authorities should articulate a coherent downstream roadmap that aligns pricing, supply, refining capacity and investment incentives. With the benefit of history, the country cannot have one at the expense of the other. Building a refining facility takes time. A balanced strategy demands that the country meets the exigency of the moment while stimulating the growth of local capacity at the same time. Both short-term supply stability and long-term sustainability through local capacity are important and we cannot have one and not the other, which calls for a comprehensive fiscal strategy articulation.

Indeed, Nigeria is at a crossroads. The choice is between temporary relief with permanent vulnerability or a disciplined reform through a deliberate policy action path that delivers long-term stability. The suspension of the 15 per cent duty may soothe today’s pain, but unless matched with a firm commitment to domestic refining and policy consistency, it will ultimately deepen the very crisis it seeks to prevent.

But most importantly, there are mid-points beyond the binary ends. The government must explore the options with tact and caution. The local players must equally ramp up capacity to justify the need for a duty that discourages importation.

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