Fuel import bill fell 54% in two years as local refining expands

Nigeria’s spending on imported refined petroleum products has dropped sharply by 54 per cent over the past two years, falling from $14.58bn in the first nine months of 2023 to $6.71bn in the corresponding period of 2025, according to the Central Bank of Nigeria’s Balance of Payments (BoP) data.

A review of the CBN’s 2023 and 2024 full-year reports and the Q3 2025 BoP presentation shows a steady year-on-year decline in fuel import costs. Import spending fell to $11.38bn between January and September 2024, representing a $3.20bn or 21.9 per cent reduction from the same period in 2023, before dropping further by $4.67bn, or 41 per cent, in the first nine months of 2025.

Overall, Nigeria spent $7.87bn less on refined fuel imports in the first nine months of 2025 compared with the same period in 2023, reflecting a significant easing of foreign exchange outflows linked to petroleum products.

The CBN data also indicate a 41 per cent year-on-year decline in refined fuel imports by the third quarter of 2025, suggesting early signs of import substitution as new and rehabilitated refineries increase output.

This trend comes amid broader structural reforms aimed at reducing pressure on external reserves and stabilising the naira. For decades, Nigeria relied heavily on imported refined fuel due to weak domestic refining capacity, making fuel imports a major drain on foreign exchange.

The removal of petrol subsidies in 2023 marked a turning point, as higher pump prices reduced consumption and curbed arbitrage-driven demand. Tighter foreign exchange management by the CBN also helped moderate import volumes.

In addition, domestic supply has expanded, particularly in the downstream oil sector, with competition intensifying as marketers face supply from the $20bn Dangote Petroleum Refinery in Lekki.

Despite the sharp decline, fuel imports have not disappeared. Marketers still spent an estimated $6.71bn importing refined products during the period under review, highlighting Nigeria’s continued, though reduced, dependence on foreign supplies.

Energy economist Professor Wumi Iledare cautioned against claims that fuel importation has ended. In a note titled “Dangote Refinery, Petrol Imports, and Market Reality,” he said such assertions reflect optimism but do not fully capture market realities.

According to Iledare, while the Dangote Refinery has improved domestic supply and reduced marginal dependence on imports, Nigeria’s downstream petrol market remains anchored on import parity.

“Even when no petrol cargoes are landing, the credible threat of imports remains the market anchor,” he said, noting that imports still serve as a risk-management tool for supply disruptions, demand surges and refinery operational risks.

He added that the Petroleum Industry Act promotes liberalisation and competition, leaving no room for discretionary declarations that fuel imports have ended. He urged policymakers to frame the narrative around reduced marginal dependence, rather than complete import elimination.

Similarly, the Chief Executive Officer of petroleumprice.ng, Jeremiah Olatide, described the 54 per cent drop in import spending as a major shift driven largely by increased local refining.

He noted that Dangote Refinery’s reported daily supply of over 50 million litres of petroleum products aligns with the CBN data, adding that a combination of local refining and residual imports is gradually strengthening Nigeria’s energy security.

Quarterly BoP figures show refined fuel imports declined from $3.26bn in Q1 2025 to $1.80bn in Q2 and $1.65bn in Q3, indicating steady moderation throughout the year.

However, Nigeria’s total import bill continued to rise, increasing from $9.20bn in Q1 to $10.30bn in Q3, driven mainly by non-oil imports. On the export side, earnings from crude oil, gas and refined products improved to $13.05bn in Q3, supported by higher crude oil exports, although gas exports declined due to infrastructure and global market challenges.

Analysts say while the data point to progress, Nigeria’s journey to full energy self-sufficiency will remain incomplete until domestic refineries operate consistently at scale and fully meet local demand.