BREAKING: Fuel price may go up – Marketers

Nigeria’s petroleum marketers have raised alarm over potential fuel price increases following President Bola Tinubu’s approval of a 15% import duty on petrol and diesel. The controversial policy has divided stakeholders in the oil and gas sector, creating uncertainty about its impact on consumers.

The presidential approval came through an official letter dated October 21, addressed to key government agencies including the Federal Inland Revenue Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The document, signed by the President’s Private Secretary, Damilotun Aderemi, outlines the new tariff framework for premium motor spirit and diesel.

According to FIRS Chairman Zacch Adedeji, who requested the policy, the duty will be applied to the Cost, Insurance, and Freight value of imported fuel. This could increase petrol prices by approximately N99.72 per litre. The government maintains this move will stabilize the market and support domestic refining capacity.

The policy has generated heated debate among industry experts and stakeholders. Some economists welcome it as necessary protection for local refineries, while marketers warn it could burden consumers already grappling with high living costs.

The timing coincides with ongoing tensions between importers and the Dangote Refinery, which claims it can meet national fuel demand. Recent data from NMDPRA reveals that 67% of fuel consumed in Nigeria is still imported, despite Dangote’s substantial production capacity.

As detailed in the complete version, there are several key factors to consider.

The refinery’s Vice President of Oil and Gas, Devakumar Edwin, recently announced they have over 312 million litres of petrol in storage and can load any number of tankers immediately. He emphasized the facility’s capability to meet Nigeria’s entire demand for petrol, diesel, and aviation fuel while exporting surplus.

Marketers remain skeptical about supply reliability. One major marketer, speaking anonymously, expressed concerns about delayed orders from the domestic refinery. They warned that the import duty would inevitably lead to higher pump prices.

Managing Director of 11PLC, Otunba Tunji Oyebanji, acknowledged the government’s revenue benefits but noted it would mean “higher prices for Nigerians.” The Independent Marketers Association of Nigeria (IPMAN) plans to formally address the issue next week.

Supporters of the policy argue it’s essential for protecting local investment. Former IPMAN General Secretary Mike Osatuyi described it as necessary protection for domestic refineries against cheaper imports. He emphasized that Nigeria must stop providing employment for foreign countries at its own economy’s expense.

Economic experts offer nuanced perspectives on the policy’s implications. Professor Sanusi Aliyu Rafindadi of Daily Trust’s Board of Economists supports the theoretical basis but urges careful monitoring. He warned that if domestic prices rise alongside imported costs, the revenue motive would appear stronger than protectionist intentions.

Energy economist Dr. Paul Alaje views the duty as crucial protection for local manufacturing. He compared the situation to Nigeria’s grain market, where imported products threaten domestic producers. Alaje noted the absence of fuel queues suggests current supply meets demand despite the policy change.

Professor Emeritus Wumi Iledare, a petroleum economics expert, described the approval as a “strategic inflection point” in Nigeria’s downstream policy. While acknowledging its protective benefits for local refineries, he warned about potential consumer price impacts and the need for strong competitive safeguards.

Olabode Sowunmi, CEO of Cabtree Limited, raised fundamental questions about production costs. He questioned why domestically refined fuel should cost more than imported products unless foreign refiners receive subsidies. Sowunmi predicted possible price increases to N1,500 per litre if the policy proceeds.

The government maintains the duty will operationalize crude transactions in local currency and ensure stable petroleum product supply. As the debate continues, Nigerian consumers await the practical implementation of this policy and its real-world impact on their daily lives and household budgets.

The coming weeks will reveal whether this protectionist measure achieves its intended goals of supporting local refineries or simply adds another layer of cost burden to already stressed consumers. Market response will ultimately determine the policy’s success or failure.