Nigeria’s Central Bank Allocates $1.26B for Fuel Imports

The Central Bank of Nigeria allocated $1.26 billion between January and March 2025 to support the importation of petroleum products and related items.

This funding comes as fuel marketers continue to import petrol, even with increased output from the Dangote Refinery, highlighting a competitive struggle in the nation’s downstream sector.

Import Volumes and Trends

Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority reveals that marketers imported 2.28 billion liters of petrol in the first quarter of 2025. This includes 724.5 million liters in January, 760 million liters in February, and 803.7 million liters in March.

These figures represent 69% of the 21 billion liters consumed in Nigeria from August 2024 to early October 2025, reflecting a reliance on imports despite local refining advancements.

Monthly Funding Breakdown

The Central Bank’s disbursements varied across the quarter. January saw $457.83 million allocated, making up 36.2% of the total. February’s allocation dropped to $283.54 million, or 22.5%, before rising to $517.55 million in March, the largest share at 41.3%.

These funds underscore the significant foreign exchange demands of fuel imports, impacting Nigeria’s reserves and currency value.

Local Refining vs. Imports

The Dangote Refinery, with a capacity of 650,000 barrels per day, has boosted local petrol production and even begun exporting to countries like the United States. However, many marketers continue to favor imported fuel due to pricing advantages.

The competition between the refinery and importers has intensified, with cost being the primary factor driving purchasing decisions.

Marketers’ Perspective

A spokesperson for the Independent Petroleum Marketers Association of Nigeria emphasized that pricing dictates market choices. “In our industry, the cheapest option wins,” the spokesperson said.

“If imports are more affordable, we buy them. If the refinery offers better prices, we’ll source locally.”

Global oil prices, exchange rates, and government policies heavily influence these decisions, leaving little room for sentiment.

Economic Implications

Fuel imports remain a major drain on Nigeria’s foreign exchange reserves, affecting the naira’s value. However, the first quarter of 2025 saw one of the lowest import volumes in recent years, signaling a gradual shift toward local refining. This trend could ease pressure on the economy if local production continues to grow.

Falling Import Costs

Recent industry reports indicate a decline in the estimated import parity price for petrol, now at N805.46 per liter. This reduction, driven by global oil price fluctuations and exchange rate changes, could further influence marketers’ sourcing decisions, potentially benefiting local refineries if they maintain competitive pricing.

Looking Ahead

The ongoing rivalry between Dangote Refinery and fuel importers highlights the critical role of pricing in Nigeria’s petroleum market. As local refining capacity expands, the nation may reduce its reliance on imports, preserving foreign reserves.

For now, marketers’ focus on cost efficiency will shape the balance between local and imported fuel, with significant implications for Nigeria’s economy.