World Bank fuel import call splits downstream stakeholders

The call by the World Bank for the Federal Government to reopen and reinstate fuel imports has sharply divided industry players, with marketers pushing for full deregulation and competition, while some energy experts caution against undermining local refining capacity.

The Independent Petroleum Marketers Association of Nigeria argued that restricting fuel imports undermines the spirit of deregulation under the Petroleum Industry Act, insisting that a truly liberalised market must allow both local and international players to compete freely.

Energy experts, however, offered a more cautious perspective, questioning the basis of the World Bank recommendation and urging the government to prioritise national energy security. They added that improving transparency in refining costs and pricing templates would build public confidence, while a balanced approach would help stabilise the sector without exposing Nigeria to external supply shocks.

An official of IPMAN and four energy experts, speaking in separate interviews with our correspondent, offered divergent views on the issue.The report, obtained on Wednesday, recommended reopening the Premium Motor Spirit market to imports, arguing that the suspension of import licences since January 2026 has reduced competition and pushed prices above import-parity levels.

It also stated that imported petrol is about 12 per cent cheaper than fuel supplied by the Dangote Petroleum Refinery, reflecting distortions in the domestic pricing structure amid soaring global crude prices.

The bank said, “Reopen the PMS market to competition. The suspension of import licenses since January 2026 has reduced competition, allowing prices to exceed import-parity levels. Allowing qualified marketers to resume imports would restore competition, reduce pricing distortions, and better align domestic prices with global benchmarks. Greater market contestability would also strengthen supply security by reducing reliance on a single refinery and broadening sourcing options, while remaining consistent with domestic refining objectives.”

It added that broader sourcing options would strengthen supply security and reduce reliance on a single refinery, reinforcing macroeconomic stability.

Commenting on this, the National Publicity Secretary of IPMAN, Chinedu Ukadike, argued strongly that restricting imports contradicts the spirit of deregulation under the PIA.

“If the government says it has removed the subsidy and the PIA enables competition, if you would now say there should be no import, have you not started regulating the market?” he asked.

Ukadike maintained that limiting import licences effectively shrinks the market and weakens competition.

“Regulating the market betrays the function of the PIA. If you deregulate the economy, you would have competitive strength, whereby local and international players can compete with their goods and services. So saying there is no import licence is shrinking the market and leaving no window for competition,” he said.

He further called on the Federal Government to completely withdraw from controlling import licences. “I am also stating clearly that the Federal Government should take its hands entirely off import licence issuance. Allow the forces of demand and supply to regulate the market. It is these forces that will affect prices and determine import and export dynamics,” he added.

Ukadike also questioned the sustainability of relying heavily on domestic supply, noting that price volatility at the refinery level could hurt businesses.

“On the part of Dangote, yes, there is availability, but in less than four months, the refinery has moved its prices multiple times. No one can sustain a business that way. Allow import so that it would dictate consumption and prices. This is business and economics. Those who want to know how to get it cheaper,” he stated.

However, the Principal Partner at The Energy Consulting Practice, Kelvin Emmanuel, faulted the World Bank’s recommendation to reopen fuel importation, describing it as flawed and disconnected from market realities in Nigeria’s downstream sector.

“The statements credited to the World Bank are flawed because they do not factor in the quality specifications of the product imported into Nigeria, which are mostly priced through ship-to-ship operations in Lome, in line with the provisions of Section 317(11) of the Petroleum Industry Act,” he said.

He maintained that prevailing market conditions make it practically impossible for importers to land petrol at competitive prices relative to locally refined products. “The reality is that importers cannot land PMS at less than N1,750 per litre for 50 parts per million specification fuel. So, the assumption that imports will automatically reduce prices is not supported by current cost realities,” Emmanuel added.

The energy expert also linked the World Bank’s position to broader global market dynamics, noting that Nigeria’s growing refining capacity has disrupted established fuel trade patterns.

“I can understand the growing frustration in the global community, given that Nigeria has now solved large-scale refining, and imports of cheap fuels previously rejected in Europe have dropped by about 90 per cent. The advice given by the World Bank is not worth a grain of salt and should be disregarded,” he said.

Emmanuel further stressed that Nigerians must come to terms with the realities of a deregulated market, where fuel prices are influenced by global crude oil prices and exchange rate movements.

“Nigerians have not come to accept that in a deregulated market, prices are subject to international crude prices and exchange rate fluctuations. As long as the naira is not allowed to fully adjust due to monetary constraints, the country will remain exposed to external shocks,” he stated.

He added that local refiners are also facing cost pressures driven by geopolitical developments and structural gaps in domestic crude supply. “Dangote is constrained by the current paper market prices for crude oil, and the ongoing conflict has imposed additional premiums for physical deliveries, ranging between $19 and $29 per barrel. In addition, the absence of a well-structured domestic crude supply framework, as provided under Section 109 of the PIA, leaves refiners grappling with multiple pricing variables,” he said.

Prof Wumi Iledare, Professor Emeritus of Petroleum Economics, said the policy must be carefully balanced to avoid undermining Nigeria’s refining progress. “The World Bank’s advice that Nigeria should increase petrol imports comes at a moment of real pressure. Global energy prices are rising, tensions in the Middle East are adding uncertainty, and at home, the impact is clear: higher fuel costs, rising food prices, and households feeling the squeeze,” he said.

He noted that in the short term, allowing more imports could help stabilise supply and moderate price shocks in the downstream market. “In that context, the recommendation makes sense. Imports can serve as a quick stabiliser, easing supply constraints, calming price spikes, and offering some relief in an inflationary environment,” he added.

However, Iledare cautioned that Nigeria’s current situation is fundamentally different from previous years, with new refining capacity gradually transforming its energy independence trajectory.

“But this is where the story becomes more complex. Nigeria is not where it used to be. With new refining capacity coming on stream, the country stands at the edge of a long-awaited transition, from a fuel-importing nation to one that can meet its own needs and even export,” he said.

He warned that overreliance on imports at this stage could weaken investor confidence in local refining projects. “To lean too heavily on imports now, without clear limits, risks slowing that transition and sending the wrong signals to domestic investors,” he cautioned.

According to him, what is required is a disciplined policy framework that balances imports and local refining to support stability without reversing structural progress. “What this moment really calls for is not a binary choice, but policy discipline. Yes, imports may be necessary for now. But they must be targeted, temporary, and transparent, designed only to stabilise the system, not redefine it,” he said.

Iledare stressed that government policy must continue to prioritise domestic refining while ensuring pricing mechanisms remain competitive, efficient, and fair. “At the same time, every policy lever should point firmly toward strengthening domestic refining, improving market efficiency, and ensuring that pricing reflects both competition and fairness,” he noted.

“Because in the end, the goal is not just to survive today’s pressures, but to avoid returning to yesterday’s dependencies. Nigeria must respond with balance: stabilise the present, but stay committed to the future,” Iledare said.

Prof. Dayo Ayoade of Lagos State University warned that the World Bank’s recommendation may not fully align with Nigeria’s national interest. “The World Bank’s call for competition is more in line with its own mandate, looking not necessarily to protect Nigeria’s interest but those of major developed countries that own the institution,” he said.

He expressed doubts over claims that locally refined fuel is more expensive than imports. “I would be cautious in accepting their figures. I have not seen independent data showing that Dangote fuel costs 12 per cent higher than imports. You find that Dangote fuel is not being shipped, so transportation and insurance costs should be lower. So how those figures were derived needs to be examined closely,” he said.

Ayoade stressed that regulators, not external bodies, should address pricing concerns. “We have competition agencies and a regulator. It is the job of the Nigerian Midstream and Downstream Petroleum Regulatory Authority to monitor pricing. If these prices are correct, they should engage the refinery, review the numbers, and allow adjustments where necessary,” he added.

He warned against weakening Nigeria’s domestic refining capacity. “We should not throw the baby out with the bathwater. This refinery is critical. Imagine what would have happened to Nigeria during the Iran-U.S tensions if it weren’t operational. We have not seen fuel scarcity or long queues. We should prioritise energy security first. Pricing comes after that,” he said.

Jeremiah Olatide, CEO of Petroleumprice.ng, raised concerns over rising fuel prices and called for greater transparency in pricing mechanisms. “For me, Dangote’s pricing template and refining cost should be transparent because Nigeria has recorded over a 100 per cent jump in diesel prices and about 72 per cent increase in petrol prices at the gantry,” he said.

“Nigeria’s pump and gantry prices are now among the highest. That is why transparency is very important. Nigerians need to know the parameters that make up the refining cost of a litre and the margin added to determine the final price,” he added.

He noted that while landing costs for imported fuel are transparent, the same cannot be said for local refining. “Even a layman in the downstream sector can analyse landing cost because it is transparent. We need similar clarity for refining cost,” he said.

Olatide stressed that competition remains key to stabilising the downstream sector. “Transparency and competition will help stabilise the industry and reduce prices at the pump. What we are seeing now is that gantry prices may be lower, but pump prices remain high, creating an imbalance. We need competition to achieve a more stable downstream market,” he added.

Nigeria halted the issuance of fuel import licences earlier in 2026, following increased reliance on domestic refining, particularly from the Dangote refinery. Rising global oil prices driven by geopolitical tensions, especially the Iran-US conflict, have pushed up local fuel prices, triggering concerns over affordability, inflation, and market competitiveness.

According to NMDPRA data for February 2026, domestic refining overwhelmingly supplied Nigeria’s petrol needs, with imported fuel making up about 8 per cent of total supply, while local refineries supplied approximately 92 per cent.

While the government maintains that deregulation remains in place, the World Bank’s recommendation has reignited debate over whether limiting imports undermines competition or protects local refining capacity.

The institution warned that Nigeria faces a complex mix of gains and risks from rising global oil prices triggered by the Middle East conflict, including inflationary pressures and tighter financial conditions. It noted that petrol prices surged about 45 per cent between February and March, while diesel prices nearly doubled, intensifying the cost of living.

According to the bank, an increase in oil prices to about $80 per barrel could directly add about 3.1 percentage points to Nigeria’s inflation rate, affecting transportation, food, and production costs.

Despite these pressures, the World Bank acknowledged that Nigeria’s recent reforms have improved macroeconomic stability, with inflation easing to about 15.1 per cent in February 2026 from over 26 per cent a year earlier.

“Higher fuel and commodity prices are introducing inflationary pressures, and policy must aim to preserve macroeconomic stability while cushioning vulnerable households,” the bank said.

The report advised the Federal Government to avoid reintroducing fuel subsidies or price controls, recommending instead targeted cash transfers to support vulnerable Nigerians. “Fiscal policy should treat higher oil revenues as temporary and prioritise rebuilding buffers rather than permanent expenditure increases,” the bank added.

However, it cautioned that these gains remain fragile and urged policymakers to maintain tight monetary policy and channel oil windfall gains into targeted support rather than broad spending.

The debate highlights a growing policy dilemma for Nigeria: whether to prioritise open market competition to drive down prices or protect domestic refining capacity to ensure long-term energy security, as global oil market volatility continues to test the country’s reform agenda.