15% Tariff: Nigerians to Pay ₦1tn Extra for Petrol Annually

Nigerians may spend an additional ₦1 trillion yearly on petrol consumption following the Federal Government’s decision to introduce a 15 percent import tariff on Premium Motor Spirit (PMS), according to industry stakeholders and economists who warn that the new policy could heighten inflationary pressures and worsen the cost of living.

The tariff, announced as part of the government’s broader fiscal reforms to boost non-oil revenue, is aimed at reducing dependence on crude exports and strengthening local production through tariff adjustments. However, industry experts say the new levy will likely translate to higher fuel costs, as importers and marketers pass the additional expenses on to consumers.

Data from the National Bureau of Statistics (NBS) shows that Nigeria consumes an estimated 60 million litres of petrol daily, amounting to about 21.9 billion litres annually. With a 15 percent tariff applied to an average landing cost of ₦900 per litre, the cumulative annual cost to consumers could exceed ₦1 trillion.

Energy economist Dr. Olumide Balogun explained that while the government seeks to raise revenue through import duties, the immediate impact would be a spike in retail prices. “The new 15 percent tariff on imported petrol will raise the landing cost significantly. Unless domestic refining scales up quickly, Nigerians will bear the brunt through higher pump prices,” he said.

Balogun added that the policy could push pump prices to between ₦1,050 and ₦1,150 per litre, depending on exchange rate fluctuations, transportation costs, and depot margins. He noted that the development might offset recent market-driven reductions in depot prices, reversing the short-lived gains consumers had begun to experience.

Officials from the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) have expressed concern over the decision, arguing that it could destabilize the downstream sector. PETROAN’s National President, Billy Gillis-Harry, said the policy, though fiscally strategic, might create supply bottlenecks if importers reduce volumes due to higher costs.

“Marketers are already operating under tight margins. With this new tariff, some may struggle to sustain imports, especially when foreign exchange remains expensive. The burden will shift to the retail end, where consumers will feel the full effect,” he warned.

Similarly, IPMAN National Operations Controller, Mr. Mike Osatuyi, described the policy as “untimely and counterproductive,” arguing that it contradicts efforts to stabilise the market under the deregulated regime. “We just started seeing competition improve fuel supply and lower depot prices. Imposing a 15 percent tariff now will reverse that progress,” he said.

Osatuyi urged the Federal Government to exempt petrol from the tariff until domestic refineries such as the Dangote Refinery and Port Harcourt Refinery begin consistent large-scale output. “It makes sense to implement the tariff when we are producing enough locally. Right now, it will only increase costs for everyone,” he added.

Government officials, however, insist that the policy is necessary to strengthen fiscal sustainability and encourage local refining. A senior official at the Federal Ministry of Finance and Coordinating Ministry of the Economy said the tariff forms part of a “comprehensive customs reform” to harmonise duties across sectors.

“The 15 percent petrol import tariff is not a punitive measure; it’s part of a wider effort to promote domestic value addition and boost revenue generation. We expect the impact to be temporary as local refining capacity expands,” the official stated.

Finance Minister Wale Edun, in a recent policy briefing, defended the tariff as a measure aligned with President Bola Tinubu’s fiscal consolidation drive. “The long-term vision is self-sufficiency. The tariff creates an incentive for domestic production and reduces reliance on imports that drain our foreign exchange reserves,” he said.

However, economists caution that the policy could fuel inflation, which currently stands above 28 percent, and erode purchasing power. The Centre for the Promotion of Private Enterprise (CPPE) warned that the measure may have unintended consequences for households and small businesses heavily reliant on petrol for transportation and power generation.

CPPE’s Chief Executive Officer, Dr. Muda Yusuf, noted that while fiscal reforms are important, “such tariff hikes must be carefully sequenced to avoid aggravating economic hardship. Increasing the cost of an essential commodity like petrol will ripple through all sectors — from logistics to manufacturing and food prices.”

In the same vein, LCCI (Lagos Chamber of Commerce and Industry) Director-General, Dr. Chinyere Almona, said the tariff could worsen operational costs for businesses already struggling with energy expenses. “We need to strike a balance between revenue generation and competitiveness. Businesses can only thrive in a stable cost environment,” she said.

Stakeholders have also raised concerns about the social implications of the tariff, warning that it could deepen poverty levels. With transport fares already consuming a large share of household income, analysts predict that public reaction may mirror the resistance that followed last year’s subsidy removal.

A senior oil marketer, Mr. Okey Nwosu, said: “Consumers are stretched thin. Any additional cost on petrol translates to more hardship. Government needs to consider the social impact before implementing the new duty.”

Meanwhile, hopes remain high that the Dangote Refinery, which has ramped up crude refining operations and is expected to begin petrol production soon, could offset the tariff’s impact by offering locally refined products at lower prices. Industry insiders say once the refinery commences full-scale PMS supply, domestic dependence on imports—and exposure to global tariffs—will decline sharply.

Energy policy analyst Dr. Kemi Adegoke noted: “If Dangote and other local refineries can meet 80–90 percent of national demand by mid-2026, the import tariff may become redundant. But until then, Nigerians will likely face higher pump prices and cost-of-living pressures.”

Despite the concerns, the Federal Government maintains that the policy will be reviewed periodically to assess its economic impact. The Nigerian Customs Service (NCS) is expected to begin enforcing the new tariff framework from January 2026, following consultations with industry stakeholders.

As the debate continues, experts stress the need for targeted palliatives and investment incentives to cushion the immediate effects of the tariff while sustaining reforms in the downstream sector.