The Dangote Petroleum Refinery has thrown its weight behind the federal authorities’s resolution to impose a 15% ad-valorem import obligation on petrol and diesel, describing it as a crucial measure to guard native refiners and curb the dumping of imported merchandise.
In an announcement seen by Nairametrics, the corporate’s Group Chief Branding and Communications Officer, Anthony Chiejina, mentioned the coverage “marks begin” in discouraging importers from flooding the Nigerian market with cheaper, substandard petroleum merchandise on the expense of native manufacturing.
Chiejina argued that gasoline dumping has traditionally undermined home industries citing the collapse of Nigeria’s textile sector for instance and urged regulators to implement strict monitoring to stop the importation of adulterated or underpriced merchandise.
“Dumping discourages industrialisation, creates unemployment and results in income loss for the federal government,” he mentioned, including that nations internationally defend native industries from such practices.
He additionally claimed the refinery at present has ample capability to satisfy nationwide demand, stating that it’s loading about 45 million litres of petrol and 25 million litres of diesel each day, whereas working with regulatory businesses to make sure nationwide distribution.
Context: the 15% import obligation
On October 30, Nairametrics reported that President Bola Tinubu authorised a 15% ad-valorem obligation on imports of premium motor spirit (PMS) and automotive gasoline oil (diesel).
The directive, contained in a letter from the Presidency to the Federal Inland Income Service (FIRS) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), goals to encourage native refining and scale back over-reliance on imported petroleum merchandise.
The federal government mentioned the tariff will not be primarily revenue-driven however designed to create a degree taking part in discipline for home producers just like the Dangote refinery and modular refiners.
Nevertheless, not everybody agrees with the coverage or Dangote’s place. A number of entrepreneurs and analysts have warned that the brand new obligation may push gasoline costs greater and restrict competitors within the downstream market.
In accordance with reviews from trade sources, importers at present cowl practically 60% of Nigeria’s PMS provide, and a 15% obligation may elevate touchdown prices by as a lot as N90 to N100 per litre a price that can doubtless be handed on to shoppers.
The Petroleum Merchandise Retail Retailers Homeowners Affiliation of Nigeria (PETROAN), whereas supporting efforts to guard native refiners, has cautioned in opposition to potential monopolies, urging the federal government to make sure equitable entry to crude oil for all refiners and honest market practices.
The African Democratic Congress (ADC) additionally criticised the choice, describing it as “ill-timed” given rising inflation and worsening residing prices.
The occasion warned that the coverage may additional elevate pump costs past N1,000 per litre if native provide fails to completely exchange imports.
What this implies
The coverage comes at a time when Dangote Refinery, touted as Africa’s largest, is ramping up operations and looking for to dominate Nigeria’s gasoline provide.
Whereas the tariff could strengthen home refining and save international alternate in the long run, its short-term affect may embody greater gasoline costs, lowered competitors, and larger reliance on a single provider.
Business stakeholders say the federal government’s subsequent problem shall be to steadiness safety for native refineries with shopper welfare and market competitiveness because the downstream market transitions from import dependence to self-sufficiency.