President Tinubu’s new 15 per cent imported petrol and diesel tariff: A bold step or a monopoly trap? By Dr. Elisa Ehinmilorin

Introduction: A Policy with Bold Intentions

President Bola Ahmed Tinubu’s recent decision to impose a 15 percent tariff on imported petrol and diesel represents a bold step toward promoting self-sufficiency, protecting local refineries, and strengthening Nigeria’s balance of trade. In principle, this policy could significantly reduce the country’s chronic dependence on imported refined petroleum products and, by extension, conserve foreign exchange.

For decades, Nigeria, Africa’s largest crude-oil producer, has paradoxically relied on imported refined products. This long-standing dependency has strained the nation’s foreign reserves and exposed it to global price shocks. The tariff, therefore, seeks to encourage domestic refining, stimulate industrial investment, and restore confidence in the nation’s economic direction.

● Economic Rationale and Consumer Behaviour

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From a consumer-behavior standpoint, the policy aligns with fundamental economic principles. Rational consumers minimize costs while maximizing utility; therefore, if locally refined petrol and diesel are priced lower than imported alternatives, demand will naturally shift toward domestic producers. This shift could invigorate local industries, generate employment, and gradually stabilize energy prices.

The tariff can also incentivize efficiency among local refiners by increasing demand for their output and encouraging reinvestment in infrastructure, logistics, and technology. Over time, such a move may lead to stronger energy independence and improved macroeconomic stability.

● The Risk of Monopoly: A Looming Concern

Despite the sound logic behind this policy, government must tread carefully to avoid an unintended monopoly, particularly in favour of the Dangote Refinery, which already holds a dominant market position. History offers a cautionary tale: unchecked monopoly can stifle competition, discourage innovation, and leave consumers at the mercy of one powerful entity.

Monopoly markets often result in price manipulation, poor service delivery, and limited consumer choice. In the oil sector, this could mean inflated prices and reduced product quality. Government therefore must establish a level playing field where multiple refinery operators, public and private can thrive under fair competition.

● Healthy Competition as the Engine of Efficiency

The antidote to monopoly is healthy competition. When several refineries operate under transparent, rules-based conditions, they compete on cost, efficiency, and service quality, yielding better outcomes for consumers.

Nigeria’s telecommunications revolution provides a compelling parallel. In the early 2000s, an MTN SIM card cost about fifteen thousand naira or more. When new entrants like Globacom, Airtel, and Etisalat joined the market, prices dropped to under two hundred naira—often with free airtime bonuses. The result: better service, lower costs, and wider access. If the same principle of open competition is applied to the downstream oil industry, Nigerians could enjoy similar benefits: efficiency, affordability, and innovation.

● Dangote’s Market Conduct: Lessons from the Past

While Aliko Dangote’s industrial ambition and patriotic investment drive deserve recognition, his track record in sectors like cement, sugar, and flour shows a pattern of market domination and price control whenever competition is weak. In those markets, consumers have often faced higher prices and fewer alternatives.

To avoid repeating this pattern in the oil industry, regulators—particularly the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Federal Competition and Consumer Protection Commission (FCCPC)—must strengthen oversight, enforce anti-monopoly laws, and guarantee transparent access to crude supply for all refiners.

● Lessons from the American Experience

The United States provides instructive examples of how governments can dismantle monopolies to create competitive, innovative markets.

• Standard Oil (1911): The U.S. Supreme Court broke up John D. Rockefeller’s Standard Oil Trust, which controlled nearly 90 percent of American refining. The result was lower prices, regional diversity, and a more dynamic energy sector.

• AT&T (1982): The telecommunications giant was dismantled, ending its control over long-distance service and spurring the mobile and internet revolutions.

• Microsoft (1998): Antitrust actions forced Microsoft to open its software ecosystem, paving the way for Silicon Valley’s explosion of start-ups.

• Airline Deregulation (1978): The U.S. government opened the sector to competition, leading to lower fares, improved service, and broader consumer choice.

These episodes demonstrate that breaking monopolies is not anti-business, it is proinnovation, pro-consumer, and pro-growth. When markets are open, efficiency and creativity flourish.

● Extending the Reform Spirit to the Power Sector

President Tinubu must now bring similar reformist energy to Nigeria’s power sector, which remains over-centralized and inefficient. A nation of over 200 million people cannot thrive on a monolithic electricity system plagued by generation, transmission, and distribution bottlenecks.

Just as the United States unbundled its energy markets to encourage private participation, Nigeria should promote regional energy competition, renewable investments, and transparent pricing mechanisms. Breaking monopolistic barriers in the power sector would attract new players, create jobs, reduce outages, and empower industries that drive national growth.

●Policy Recommendations for Sustainable Implementation

1. Encourage Multiple Refining Players: Offer tax incentives and infrastructural support to private and modular refineries to diffuse market concentration.

2. Strengthen Regulatory Oversight: Empower NMDPRA and FCCPC to monitor pricing, enforce competition laws, and ensure transparency.

3. Ensure Equal Access to Crude Feedstock: All refineries should obtain crude at fair market rates through transparent processes.

4. Establish Market Information Systems: Regularly publish data on production and pricing to enhance accountability.

5. Protect Consumer Interests: Create feedback and redress channels against exploitative practices.

●Conclusion: The Courage to Reform

President Tinubu’s administration deserves commendation for its political will to pursue structural reforms that previous governments shied away from. But reform requires more than courage, it demands fairness and vigilance. The 15% tariff on imported petrol and diesel can be a landmark success if implemented with strong competition safeguards and extended to other vital sectors like power. America’s example proves that competition builds nations; monopoly cripples them.

■ Dr. Elisa Ehinmilorin, Public Affairs and Economic Analyst, writes from Los Angeles, California, USA.