Suspension Of 15% Duty On Petrol Threat To Nigeria’s Refining Capacity–CPPE

The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that the Federal Government’s suspension of the 15 per cent import duty on petrol and diesel poses significant risks to Nigeria’s refining sector, energy security, and long-term industrial development.

The organisation warned that the policy shift could reverse hard-won gains in domestic refining, undermine investor confidence, and expose the economy to renewed foreign exchange pressures and job losses.

In a policy brief issued on Sunday, the Chief Executive Officer of CPPE, Dr. Muda Yusuf, said the decision to halt the duty contradicts Nigeria’s strategic economic objectives and places domestic refiners, particularly the Dangote Refinery and modular refinery operators, at a severe competitive disadvantage.

He stressed that these investors made multi-billion-dollar commitments on the assumption of policy stability and a regulatory environment that rewards local production.

According to Yusuf, reinstating the duty is crucial to preserving the viability of Nigeria’s emerging refining industry, which operates under far more challenging conditions than international suppliers.

He explained that local refiners grapple with high energy costs, infrastructure gaps, logistics bottlenecks, expensive financing, security risks, and port inefficiencies, factors that make competition with heavily advantaged importers unsustainable without protective measures.

The CPPE noted that the suspension reopens Nigeria to the vulnerabilities associated with heavy reliance on petroleum imports, including exposure to global price swings, supply disruptions, and geopolitical tensions.

These risks, the group said, previously contributed to the collapse of state-owned refineries and fueled the costly subsidy regime that burdened public finances for decades.

Economically, the organisation warned that increased fuel imports would elevate demand for foreign exchange, further weaken the naira, heighten inflationary pressures, and worsen balance-of-payments challenges.

With petroleum products being one of the largest components of Nigeria’s import bill, Yusuf said any policy that encourages importation directly threatens macroeconomic stability.

The brief also highlighted the negative implications for employment and industrial development. Domestic refining, the CPPE stated, underpins extensive value-chain activities in petrochemicals, plastics, logistics, engineering, and fabrication.

By encouraging cheaper imports, the new policy effectively exports these opportunities to foreign economies and erodes job creation prospects at home.

Yusuf further argued that policy reversals of this nature damage investor confidence not only in the energy sector but across the wider manufacturing and financial ecosystem.

He said Nigeria cannot afford uncertainty at a time when transformational national assets such as the Dangote Refinery and modular refineries are poised to reshape the economy.

While acknowledging that domestic refining capacity may not yet fully meet national demand, CPPE advocated guided, quota-based importation rather than dismantling protective frameworks.

Yusuf emphasised that protecting local refineries and stabilising fuel prices are not mutually exclusive goals. With the right blend of fiscal incentives, pricing transparency, improved logistics, and infrastructure support, Nigeria can achieve both competitiveness and consumer protection.

To restore balance in the downstream sector, CPPE recommended immediate reinstatement of the 15 per cent duty, introduction of targeted incentives for local refiners, improved port and logistics infrastructure, guaranteed crude supply arrangements, and enhanced policy predictability under a multi-year industrial protection plan. It also called for stronger market monitoring to track production levels, pricing trends, import volumes, and potential distortions.

Yusuf concluded that Nigeria must avoid short-term measures that compromise strategic national interests. He said that safeguarding the country’s refining capacity, energy security, and industrial future requires firm, predictable, and supportive policies that prioritise domestic production over indiscriminate importation.