NMDPRA Tests Refining Market Equilibrium

By Olumide Johnson

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently reported that Nigeria’s average daily petrol imports rose 207 percent, from 5.9 million litres in May to 18.1 million litres in June 2026, following import licences issued in May. Over the same period, domestic petrol supply fell by 22 percent, while Dangote Refinery’s daily supply declined from 41.5 million litres to 32.5 million litres. Former Lagos Chamber of Commerce and Industry Director-General, Dr Muda Yusuf, warned that sustained import growth could discourage investment in local refining, while former Major Energies Marketers Association of Nigeria Chairman, Adetunji Oyebanji, said that imports remained necessary to sustain market supply and price stability.

DECISION HIGHLIGHT

The challenge facing Nigeria’s downstream petroleum market is no longer whether to import petrol, but how to balance imports with the commercial viability of domestic refining.

DECISION MEMO

The sharp increase in petrol imports illustrates the policy trade-off between guaranteeing fuel availability and protecting investment in Nigeria’s expanding refining industry.

The import licences issued by the NMDPRA suggest the regulator prioritised uninterrupted supply as domestic refinery output softened. However, the development has revived concerns that excessive reliance on imported fuel could weaken confidence among investors financing local refining projects.

Yusuf argued that imports should complement domestic production rather than displace it.

“There is nothing particularly wrong with import, but it must be done in a way that it does not undermine domestic refineries.”

Yusuf maintained that stronger local refining would reduce foreign exchange demand, create jobs, improve Nigeria’s trade balance and strengthen future export capacity.

Oyebanji defended the imports, explaining that marketers responded to regulatory approvals and prevailing market conditions to maintain supply. He argued that imports should continue, but only at levels that preserve market balance.

The decline in Dangote Refinery’s output demonstrates why imports may remain necessary during periods of fluctuating domestic production. The broader policy issue, therefore, is not import substitution alone but creating a market framework that preserves supply security while sustaining investor confidence in domestic refining.

DATA BOX

• Average daily petrol imports (May): 5.9 million litres
• Average daily petrol imports (June): 18.1 million litres
• Import increase: 207 percent
• Domestic petrol supply: Down 22 percent
• Dangote Refinery supply (May): 41.5 million litres/day
• Dangote Refinery supply (June): 32.5 million litres/day
• Import trigger: NMDPRA import licences

WHO WINS / WHO LOSES

Winners: Consumers benefiting from improved fuel availability, petroleum marketers and industries dependent on stable fuel supply.

Losers: Domestic refinery investors if prolonged import growth reduces refinery utilisation and weakens investment returns.

POLICY SIGNALS

The Nigerian Midstream and Downstream Petroleum Regulatory Authority is signalling that market stability remains the immediate priority, while domestic refining is expected to compete within a liberalised downstream market rather than rely on import restrictions.

INVESTOR SIGNAL

Refining remains a strategic investment opportunity, but returns will increasingly depend on regulatory consistency, refinery utilisation and the balance between domestic production and imported supply.

RISK RADAR

Sustained import dependence could weaken incentives for local refining, while excessive restrictions could threaten fuel availability. Regulatory uncertainty, refinery performance and exchange rate volatility remain the principal risks to achieving a sustainable downstream petroleum market.