Nigeria cannot import its way out of high petrol costs

Nigeria's decision to continue importing petrol despite having a large local refinery has sparked debate. Marketers and competition advocates argue that keeping a cargo at the jetty helps maintain fair prices, while domestic refiners and industrialists contend that a standing import window does not encourage local value addition.

The refinery's capacity, now at 650,000 barrels per day, could theoretically supply about 75 million litres of petrol daily, but actual output sits around 42 million litres. Recent regulator data shows the refinery exporting nearly 10 million litres of petrol daily and maintaining large stocks. However, Nigeria still relies heavily on imports, with the regulator issuing import permits for the fourth quarter of 2026.

The import camp argues that having a backup source is essential for diversification, while the competition case suggests that if the ex-depot price is higher than the landed cargo cost, a monopoly could be created. The Petroleum Industry Act allows for a backwards-integration policy in the downstream sector, treating import licenses as a response to shortfalls, but not as a permanent solution.

Nigeria should import only when output plus independently checked stocks cannot cover the demand for a set number of days, the plant is down, or when a named spec is not being produced that week. Instead, the focus should be on reducing local costs by addressing pipeline, barge, truck, power, and gas reliability, as well as port and storage charges.