The Centre for the Promotion of Private Enterprise (CPPE) has issued a stark warning, stating that the Federal Government's recent suspension of a proposed 15% import duty on petroleum products poses a severe threat to the survival of domestic refining and future investments in Nigeria's oil and gas sector.
Policy Reversal Sparks Investment Concerns
Originally, the 15 per cent import duty on fuel and diesel was part of a new tax law scheduled to commence on 1 January 2026. However, following complaints from industry stakeholders who feared it would lead to higher pump prices and create a monopoly, the government suspended the duty last week.
This move has been heavily criticized by the CPPE, which had previously advocated for the tax. The Centre's Chief Executive Officer, Dr Muda Yusuf, articulated these concerns in a policy brief titled 'Safeguarding Nigeria’s Domestic Refining Capacity and Energy Security'.
Dr Yusuf argued that the duty was a crucial instrument for strategic protectionism, designed to shield emerging local refineries from unfair competition with international importers who benefit from more favourable conditions.
Multi-Billion Dollar Investments at Risk
The CPPE emphasized that major investors, including the Dangote Refinery and numerous modular refinery operators, made their multi-billion-dollar financial commitments based on the promise of policy stability and a supportive environment for local production.
Suspending the protective duty undermines this framework, exposing domestic refiners to a highly uneven playing field. The Centre highlighted that local refiners already operate at a significant disadvantage due to Nigeria's high-cost environment, which includes:
- Expensive energy and self-generation of power
- Critical infrastructure gaps and logistics bottlenecks
- A high cost of capital
- Security-related risks and operational inefficiencies
"These structural disadvantages make parity with imported products impossible without protective measures," the CPPE stated.
Broader Economic and Security Implications
The policy reversal carries profound implications beyond the immediate threat to refineries. The CPPE warned that reverting to heavy dependence on fuel imports reopens Nigeria to global price volatility, geopolitical disruptions, and supply insecurity.
These are the same conditions that previously led to the collapse of the nation's public refineries and necessitated a fiscally draining fuel subsidy regime.
Furthermore, the suspension is expected to increase pressure on Nigeria's foreign exchange reserves, as petroleum importation is one of the largest consumers of FX in the country.
Urgent Calls to Safeguard National Assets
In its recommendations, the CPPE urgently called on the government to reinstate the 15 per cent import duty to restore competitive balance. It also advocated for targeted production incentives, strengthened policy predictability, and intensified market monitoring.
"Nigeria must avoid short-term measures that jeopardise long-term national interests," the Centre cautioned. It concluded that protecting domestic refining capacity, including transformative assets like the Dangote Refinery, is an urgent national imperative that aligns squarely with Nigeria's long-term economic and strategic goals for energy security and industrialization.
