Tinubu slaps new tax on fuel imports, a major boost for Dangote Refinery

President Bola Tinubu has approved a 15% import duty on petrol and diesel, a policy seen as a major protection for Nigeria’s struggling local refiners, particularly the $20 billion Dangote Refinery, which has faced months of operational headwinds from regulators, oil unions, and market instability.

The new tariff, which will take effect after a 30-day window, was contained in a presidential memo dated October 21 and addressed to the Attorney-General of the Federation, the Federal Inland Revenue Service (FIRS), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Officials say the duty will align import costs with domestic realities and protect local producers from being undercut by cheaper imported fuel. FIRS chairman Zacch Adedeji, who requested the policy, said the tariff – applied on the Cost, Insurance, and Freight (CIF) value – is expected to raise petrol prices by about ₦99.72 per litre, bringing pump prices in Lagos to around ₦964.72 ($0.62) per litre.

There is no indication the Dangote Refinery will increase its prices although the firm’s owner, Aliko Dangote, said this week that fuel price in Nigeria still remained cheap despite a more than four-fold increase in the last two years.

What the Policy Means

Import duty is a tax imposed on goods brought into a country, designed to make locally produced alternatives more competitive by increasing the cost of imports. In this case, it is meant to discourage fuel importers from flooding the market with cheaper foreign petrol, which could make it difficult for local refineries to recover production costs.

According to the government, the measure is “corrective, not revenue-driven,” and seeks to “strengthen local refining capacity and ensure a stable, affordable fuel supply.”

Dangote’s Troubles

The new policy follows months of turbulence at the Dangote Petroleum Refinery, Africa’s largest with a capacity of 650,000 barrels per day. Despite commencing operations in 2024 with the promise of ending Nigeria’s decades-long reliance on imported fuel, the refinery has faced persistent challenges.

Industry unions, including the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), staged a strike at the refinery weeks ago, crippling operations and exposing rifts over employment terms and operational control. Earlier, the company had clashed with the Nigerian National Petroleum Company Limited (NNPC) over crude oil supply terms and pricing.

NNPC, which holds a minority stake in the refinery, was accused of delaying or under-supplying crude, forcing Dangote to import feedstock at higher costs. Meanwhile, fuel importers continued to bring in cheaper products — often at prices below what Dangote could match, given its production and logistics costs.

Tinubu’s new import duty appears designed to tilt the market back toward domestic refining. By making imported fuel more expensive, local producers like Dangote are better positioned to compete, sustain production, and attract investment.

Officials say the policy also supports Nigeria’s broader energy security goal — reducing exposure to global price shocks and foreign exchange volatility by relying more on local refining.

“This reform will accelerate Nigeria’s path toward fuel self-sufficiency, protect consumers and investors alike, and stabilize the downstream petroleum market,” the presidential memo stated.

Critics argue it primarily benefits Dangote, currently the only functional large-scale refinery in Nigeria, while potentially pushing pump prices higher for consumers already battling inflation.

“It’s so stupid,” one investment analyst wrote on X. “You got FX allocations at special rates to build your refinery. Okay. You are operating in a free trade zone. Okay. You say your refinery is technologically advanced. Okay. Then produce your stuff, let other do their business.

“The market (i.e., consumers) will decide what they want. If your product is what they want, fine. If it is not what they want, they go for their preference. Are policymakers just daft that they don’t understand the need not to eliminate consumers’ options? Import tariff because why???”