By Benjamin Umoru

For decades, Nigeria, Africa’s largest crude oil producer has faced the paradox of exporting crude oil while importing refined products at great cost.

This dependence on importation has heavily drained the nation’s foreign reserves, distorted fuel pricing, and made the economy vulnerable to global oil market fluctuations.

However there appears to be light at the end of the tunnel. By imposing an import duty, the Tinubu administration seeks to encourage more local refining, protect and boost new investments such as the Dangote Refinery, create more employment opportunities and raise revenue to accelerate national development.

In other words, the newly approved 15% import duty brings several potential benefits for Nigeria’s economy.

Firstly, it serves as a protective measure for local refineries, such as the Dangote Refinery. By discouraging cheap imports, the policy gives domestic refiners a competitive advantage, enabling Nigeria to process its crude oil locally. This will help conserve foreign exchange, create more jobs, and boost the value of the naira.

Furthermore, the import duty represents an important revenue generation tool for the government. For years, Nigeria’s fuel import system has drained public treasury through subsidies and import costs. The Nigerian government has been subsidising petroleum since 1973.

Sadly, between 2005 and 2021, the government spent a whopping N13.7 trillion on fuel subsidy alone, which provides context for the multi-year fiscal burden before subsidy removal.

Even though federal government’s subsidy on petrol was terminated in May 2023, with this new duty, the government can channel additional revenue into critical sectors such as education, healthcare, and infrastructure, thereby strengthening the national economy.

This policy no doubt will promote industrial growth, self-reliance and boost the Gross Domestic Product, GDP.

Similarly, encouraging local refining will have ripple effects across other industries, including logistics, transport, maintenance, and engineering.

It will also attract more investors to Nigeria’s downstream oil sector, fostering innovation and competitiveness.

Lastly, the import duty could help curb fuel dumping and smuggling, practices that have long plagued Nigeria’s downstream sector.

By aligning import prices closer to local production costs, the incentive to illegally re-export subsidised or under-priced fuel to neighbouring countries may diminish.

To fuel importers and marketers, this policy should not be viewed as punitive but as a national call to cooperation..

President Tinubu’s decision is a visionary approach, rooted in the need to make Nigeria energy self-sufficient. Importers are therefore urged to yield to this directive and align their operations with the government’s reform agenda.

By partnering with local refineries and supporting domestic production, importers can remain vital contributors to the country’s progress rather than obstacles to reform.

Indeed President Tinubu’s approval of a 15% import duty on petrol and diesel is a bold and strategic step toward national self-reliance. While short-term discomfort is inevitable, the long-term benefits stronger revenue, increased local production, and economic stability far outweigh the challenges.

Importers and all stakeholders should in the national interest, rally behind this vision, ensuring that Nigeria finally takes control of its energy and builds a more resilient economy for future generations.

Benjamin Umoru, a chartered accountant writes from London.

Benjamin Umoru