…If it is true, a litre of petrol will be above N1000
…additional N150 will be paid on current price per litre
… It may also lead to social discontent, if it is true— operators
Tension is currently high in the downstream sector of the petroleum industry as many stakeholders claimed that the Federal Government may have approved the 15% tariff on imported Petrol.
They said even though they cannot say with certainty that it has happened but the news reaching them is that the Federal Government may have concluded the deal with a section of the downstream operators, and it may be announced very soon.
“For a country that does not have enough refining capacity to add a 15% tariff on imported fuel, this will discourage investors or operators from importing the product, and consumers will pay more. This would consequently lead to fuel scarcity and price increases, and the price of petrol would be in the region of N1000,” a stakeholder stated.
Some stakeholders said that the import tariff on PMS, if implemented, though potentially revenue-generating in the short term, poses far-reaching risks to Nigerian citizens, the economy, and the credibility of the downstream reform process.
It would inadvertently reverse the gains of deregulation, compound existing sectoral distress, constrain competition, weaken energy security, and erode investor confidence.
Based on official Nigerian Midstream Petroleum Regulatory Authority (NMDPRA) data, Nigeria currently imports about 70% of its refined petroleum products, while only 30% is sourced locally. However, of this 30%, approximately 98% originate from Export Processing Zones (EPZs) which, by regulation, qualify as imports. This effectively means that the 15% import tax will still apply to the bulk of locally refined products, undermining the argument that such taxes would make locally produced fuel cheaper.
Assuming, that the 30% locally refined products are exempted from the proposed taxes and therefore expected to be cheaper, there currently exist no clear mechanisms within the downstream value chain to distinguish between taxed imported products from tax-exempt locally refined products during distribution or consumption.
In practice, this gap would enable arbitrage within the supply chain, enriching distributors who could blend or even sell products at higher prices while still benefiting from the exemption. Consequently, the government would suffer revenue losses from uncollected taxes, while the final consumer would derive no benefit from the intended price relief on locally refined products.
Additionally, introducing the tax on refined petroleum products will lead to sharp rises in the prices of refine petroleum products and the consequence would be a sharp price of goods across board thus lowering the living standard of Nigerians which will lead to agitations for increased pay by workers which could eventually lead to an overheating of the polity at a time when elections are around the corner in Nigeria.
