Rising fuel imports could cripple local refineries – CPPE
August 31, 2026 1:33 am
File Photo: Chief Executive Officer, CPPE, Dr. Muda Yusuf
Nigeria risks undermining its domestic refining sector if petroleum-product import permits continue to be issued without proof of a genuine supply shortfall, the Centre for the Promotion of Private Enterprise has warned.
In a policy report on Sunday, the Chief Executive Officer of the CPPE, Dr Muda Yusuf, argued that unchecked import licensing could reverse the gains recorded from the expansion of local refining capacity.
“Where domestic supply is genuinely adequate, import permits can suppress refinery offtake, weaken utilisation rates and transfer demand, income and employment abroad,” Yusuf said.
The CPPE stated that Nigeria’s downstream petroleum market had reached “an important transition point,” noting that large-scale private refining had significantly reduced the structural justification for import dependence.
According to the centre, regulatory data showed that average daily imports of Premium Motor Spirit, commonly known as petrol, rose from 5.9 million litres in May to 18.1 million litres in June 2026, representing a 206.8 per cent increase, before climbing further to 19.7 million litres in July.
The centre said imports accounted for 43.3 per cent of total PMS receipts in July, up sharply from 12.4 per cent in May, according to figures obtained from the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
The CPPE noted that the import surge coincided with clear evidence of strong domestic refining capability. It said the Dangote Refinery reported a test run above 700,000 barrels per day in June, while the NMDPRA had recorded domestic refineries operating at an average capacity utilisation of 99.12 per cent in April.
“Nigeria’s seaborne petroleum-product exports have also risen strongly, indicating that aggregate refining capability is no longer the binding constraint it once was,” the report stated.
The CPPE clarified that its concern was not with imports needed to close a verified shortfall, describing such imports as “a legitimate contingency tool for refinery outages, seasonal demand spikes, quality gaps and strategic-stock replenishment.”
However, Yusuf said there is a problem when import permits were approved “without a transparent demonstration that domestic refiners cannot meet the relevant demand at acceptable standards and competitive market terms.”
Yusuf linked the issue to the Petroleum Industry Act, stating that Sections 317(8) to (9) of the Act tied petroleum-product import licensing to the existence of a domestic supply shortfall.
“Regulatory discretion should therefore be exercised transparently, predictably and consistently with the country’s domestic-refining and industrialisation objectives,” he said.
The CPPE listed foreign-exchange conservation, job creation, industrialisation, energy security, investment confidence and fiscal resilience as the major national interests at stake, warning that “imports transfer much of this multiplier abroad.”
It further cautioned that uncertainty around import policy could discourage investment in the refining sector. “If investors believe permits will admit imports irrespective of verified domestic availability, expected refinery utilisation and cash flow become less bankable,” the report stated.
To address the concerns, the CPPE urged the NMDPRA to publish a product-by-product supply-gap determination before approving significant import volumes, give domestic refiners a fair opportunity to meet verified demand, and restrict import permits to a quantified residual gap with a defined validity period.
The centre also called for monthly disclosure of permit, landing and domestic-evacuation data, alongside the enforcement of a “use-it-or-lose-it” rule to prevent the warehousing of speculative import permits.
“This is not a call for monopoly or blanket protection. It is a call for a systematic, rules-based regulation that makes competition fair, protects consumers and supports domestic productive capacity,” Yusuf said.
The CPPE recommended that the Federal Consumer Protection and Competition Commission strengthen oversight to curb monopolistic pricing and abuse of dominant market power, alongside a coordinated push with the Nigerian Upstream Petroleum Regulatory Commission to secure reliable crude-supply arrangements for domestic refineries.
The centre concluded that Nigeria’s downstream policy must shift decisively from managing import dependence to building a competitive domestic refining ecosystem.
“Allowing imports without a transparent, verified shortfall would squander an historic opportunity to conserve foreign exchange, create jobs, deepen industrial linkages and strengthen energy security,” Yusuf remarked.
Arinze Nwafor is a journalist at Punch Newspapers with five years of experience reporting on Nigeria’s economy, industry, data, metro, and judiciary. He focuses on highlighting growth, policy, and market challenges shaping Africa’s largest economy. Arinze’s reporting reflects practical newsroom experience, editorial judgment, and a strong commitment to accurate, informative, and audience-focused journalism.
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