According to the directive issued to the Federal Inland Revenue Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the new levy—effective November 21—is designed to strengthen local refining capacity, stabilise supply, and promote the use of the naira in crude oil transactions.
The government explained that the 15 per cent levy reflects a “market-responsive tariff framework” intended to narrow the cost gap between locally refined and imported petroleum products. Officials argue that the measure will provide a level playing field for domestic refineries struggling to compete with cheaper, often duty-free imports, particularly amid volatile foreign exchange rates and rising global freight costs.
Despite its long-term benefits, economic analysts warn that the new levy could worsen inflation and impose additional burdens on Nigerians still grappling with the effects of fuel subsidy removal in May 2023.
Labour leaders, such as Festus Osifo, President of the Trade Union Congress (TUC), have called for clarity on whether the levy will apply only to foreign importers or also to domestic refiners like Dangote Refinery, which operates within a free trade zone.
Conversely, Wale Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), described the levy as a “corrective policy” aligned with global best practices that protect domestic industries from unfair external competition.
Momoh Oyarekhua, Chairman of the Crude Oil Refinery Owners Association of Nigeria (CORAN), said the new levy would “promote fair market conditions, create jobs, stabilise the naira, and enhance energy security.”
However, critics warn that the timing could trigger public backlash, given Nigeria’s worsening poverty and inflation levels. Experts recommend that the government adopt a phased implementation strategy while using the projected ₦1 trillion annual revenue from the levy to fund social relief measures, such as agricultural support, transport subsidies, and direct assistance to vulnerable households.
They also urge fiscal incentives—like tax breaks and reduced import duties on refinery equipment—to enhance refinery competitiveness and prevent fuel shortages.
Analysts agree that the policy’s success will depend on how quickly domestic refineries like Dangote Refinery and modular refineries in Edo, Rivers, and Imo States can ramp up production to meet national demand.
