Stop Issuing Indiscriminate Fuel Import Licences, Economist Urges NMDPRA

The Centre for the Promotion of Private Enterprise (CPPE) has called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to stop issuing indiscriminate petroleum-product import licences and instead tie approvals to independently verified domestic supply gaps.

The Centre made the call in a policy brief titled “On Rising Petroleum-Product Imports and the Future of Domestic Refining,” released yesterday by its Director/CEO, Dr. Muda Yusuf.

Yusuf said petroleum-product imports should serve strictly as a transparent gap-filling mechanism and should not become a parallel market that displaces viable domestic production.

According to him, recent NMDPRA data indicate a sharp reversal in Nigeria’s fuel import dependence, with average Premium Motor Spirit (PMS) imports rising from 5.9 million litres per day in May to 18.1 million litres per day in June and 19.7 million litres per day in July.

He said the increase pushed the share of imports in total PMS receipts to 43.3 per cent in July, up from 12.4 per cent in May.

Yusuf noted that the surge in imports was occurring at a time when domestic refining capacity had expanded significantly.

He cited Dangote Refinery’s reported test run above 700,000 barrels per day in June, while NMDPRA data showed domestic refineries recorded an average capacity utilisation of 99.12 per cent in April.

He also pointed to the increase in Nigeria’s seaborne petroleum-product exports as evidence of growing domestic refining activity.

“The concern is not with imports required to close a genuine and independently verified shortfall.

“The policy concern arises where import permits are issued without a transparent demonstration that domestic refiners cannot meet the relevant demand at acceptable standards and competitive market terms,” Yusuf said.

CPPE said Sections 317(8)–(9) of the Petroleum Industry Act contemplate the issuance of import licences in the context of a domestic supply gap.

The Centre therefore argued that regulatory discretion must be exercised in a manner consistent with Nigeria’s industrialisation and energy security objectives.

To address the issue, CPPE proposed a 10-point framework for managing petroleum-product imports.

Among its recommendations, the Centre called for the publication of monthly product-by-product supply-and-demand balances and the requirement for a formal supply-gap determination before approving material imports.

It also recommended giving qualified domestic refiners a time-bound opportunity to respond to identified supply gaps, while import permits should be quantified and limited to the verified residual gap.

Other recommendations include auditing import-permit performance under “use-it-or-lose-it” rules, applying equal quality and tax standards to domestic and imported products, and establishing objective emergency-import triggers based on stock days or refinery outages.

Yusuf also urged greater coordination between NMDPRA and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to ensure an adequate supply of crude to domestic refineries.

He called for stronger oversight of competition by the Federal Competition and Consumer Protection Commission (FCCPC) to guard against abuse of market dominance.

“Support for domestic refining should not become protection for inefficiency, monopoly pricing or poor service,” the CPPE CEO said.

He added that “the appropriate framework is ‘domestic supply first, competition always, imports only for verified gaps’.”

Yusuf warned that allowing petroleum-product imports without transparent justification could undermine foreign-exchange conservation, job creation and investment confidence, while also weakening Nigeria’s ambition to build a competitive domestic refining ecosystem.