Petrol Imports Should Only Fill Genuine Supply Gaps, Expert Says

By Benson Daniel

Petroleum product imports into Nigeria should only be considered when there is a genuine shortfall in domestic supply, as unnecessary imports could undermine the growth of local refining capacity and weaken the country’s emerging energy security.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said any decision to bring petrol into the country should be guided by actual market requirements rather than commercial interests or speculative considerations.

The position comes amid growing attention to Nigeria’s changing fuel supply landscape, particularly as domestic refineries increase production and the country moves towards reducing its historical dependence on imported petroleum products.

Yusuf stressed that imports should be linked to clearly established supply gaps. This means authorities and industry operators must first determine the volume of petrol available from domestic refineries before approving additional foreign supplies.

The approach is particularly important as Nigeria’s refining capacity expands. Increased domestic production is expected to reduce pressure on foreign exchange, strengthen local value chains and retain more economic value within the country.

For years, Nigeria relied heavily on imported petrol despite being a major crude oil producer. The arrangement exposed the economy to international crude prices, foreign exchange pressures, shipping costs and fluctuations in global petroleum markets.

The expansion of domestic refining capacity has begun to change that structure. Greater local production means that more of the petrol consumed by Nigerian motorists can potentially be supplied within the country, reducing the need to spend scarce foreign exchange on imports.

However, the transition also creates the need for careful coordination between refiners, marketers, regulators and other participants in the downstream petroleum market.

A temporary supply gap can emerge when domestic production falls below national consumption because of refinery maintenance, operational disruptions, logistics constraints or unexpected increases in demand. In such circumstances, targeted imports could help prevent shortages and maintain stability in the market.

The concern is that importing petrol when adequate domestic supplies are available could create unnecessary competition for local refiners and discourage further investment in refining infrastructure.

It could also increase the demand for foreign exchange and expose consumers and businesses to international market conditions that domestic production is intended to shield them from.

Nigeria’s downstream petroleum sector has undergone major changes since the removal of petrol subsidies and the expansion of private sector participation. Prices are increasingly influenced by market conditions, while competition among refiners, importers and marketers is expected to shape supply and pricing.

The emergence of large scale domestic refining capacity has also raised expectations that Nigeria can eventually become a net exporter of refined petroleum products.

To achieve that objective, industry stakeholders have argued that policies governing imports must support rather than weaken domestic refining.

A balanced approach would allow imports when they are necessary to prevent supply disruptions while ensuring that domestic producers are not displaced by unnecessary foreign supplies.

Such a framework would also require accurate and timely data on national consumption, refinery output, inventories and distribution. Without reliable information, it could be difficult to determine whether an import is genuinely required or simply responding to commercial opportunities.

For consumers, the ultimate objective remains a stable supply of petrol at competitive prices. Ensuring that imports are based on genuine shortages could help reduce market distortions while supporting the development of Nigeria’s refining industry.

As domestic refining capacity continues to expand, the balance between local production and imports is expected to become increasingly important. The success of Nigeria’s downstream reforms will depend partly on whether the country can maintain adequate fuel supplies while creating an environment that encourages sustained investment in domestic refining.