The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has explained to a Federal High Court in Abuja why it issued oil import licenses to oil marketing companies in the country.
NMDPRA told Justice Inyang Ekwo in a counter-affidavit filed and deposed to by Idris Musa, a Senior Regulatory Officer in the agency, in response to a suit filed by Dangote Petroleum Refinery and Petrochemicals FZE.
The regulatory authority, in the application dated and filed on December 13, 2024, stated that the current production capacity of Dangote Refinery, the plaintiff in the suit, does not yet meet the national daily petroleum product sufficiency requirements.
“Consequently, and in compliance with Section 317(9) of the Petroleum Industry Act (PIA), the 1st defendant (NMDPRA) issued licenses to import petroleum products to bridge product shortfalls to companies with good track records of international product trading,” Mr. Musa stated.
The News Agency of Nigeria (NAN) reports that Dangote Refinery filed the suit against NMDPRA and the Nigerian National Petroleum Corporation Limited (NNPCL) as the 1st and 2nd defendants.
Also joined as the 3rd to 7th defendants in the originating summons, marked FHC/ABJ/CS/1324/2024 and dated September 6, are AYM Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited.
Through its lawyer, Ogwu Onoja (SAN), Dangote Refinery prayed the court to nullify the import licenses issued by NMDPRA to the NNPCL and the five other companies for importing refined petroleum products.
The plaintiff also prayed the court to declare that NMDPRA violated Sections 317(8) and (9) of the PIA by issuing licenses for the importation of petroleum products, arguing that such licenses should only be issued in cases of petroleum product shortfalls.
The company sought ₦100 billion in damages against NMDPRA for allegedly continuing to issue import licenses to NNPCL and the five companies for importing petroleum products, among other reliefs.
However, NMDPRA, through its officer, urged the court to dismiss the suit, describing it as misconceived, unmeritorious, and incompetent.
Mr. Musa argued that Dangote Refinery is not entitled to any of the reliefs sought. He stated that one of NMDPRA’s key functions is to ensure a vibrant petroleum sector operating in line with international best practices. The authority also works to maintain national energy security by ensuring continuity of supply and preventing market abuse, dominance, and unhealthy monopolies where a single entity could control the supply chain and affect the lives of over 200 million Nigerians.
He added that NMDPRA has supported and continues to support all local refineries to optimize their capacity while maintaining national energy security.
According to him, as of July 18, 2024, there were four functional licensed modular refineries in the country. He further stated that four refineries owned by NNPCL were at various stages of maintenance during the second quarter of 2024. During this period, Dangote Refinery and the four modular refineries produced Automotive Gas Oil (AGO) and Aviation Turbine Kerosene (ATK) in significant volumes.
Mr. Musa said NMDPRA was closely monitoring developments to determine when local production could meet the country’s daily petroleum product sufficiency needs. The agency is also mandated to promote competition and prevent dominant market positions and unhealthy monopolies in the oil and gas sector.
He noted that import volumes allocated among licensed importers are based on criteria, including refining output in the preceding quarter, share of active wholesale customers, competitive pricing, and prudent supply, storage, and distribution track records.
The official said uncertainties persist about the ability of Dangote Refinery to cater solely to Nigeria’s petroleum product supply needs in both the short and long term. He argued that the refinery’s estimated production capacity for AGO and Jet Oil (Jet A-1) lacked scientific backing, which prevents NMDPRA from relying on such data to grant Dangote sole supply rights.
He said suspending import licenses for other entities and granting exclusive rights to Dangote Refinery would create a monopoly, jeopardizing energy security and increasing pricing risks. Instead, NMDPRA supports multiple supply sources to ensure stability.
The official emphasized that NMDPRA remains optimistic about the anticipated operationalization of NNPCL’s four refineries and increased output from modular refineries to improve competition in local refining.
Regarding Dangote’s argument about a 0.5% levy, Mr. Musa said the levy is prescribed by Sections 47(2)(c) and 52(7) of the PIA and must be paid by wholesale customers, not producers. He noted that Dangote is aware of this obligation.
He stated that Dangote Refinery must remit levies to NMDPRA no later than 21 days after the end of the sales month and argued that the plaintiff’s failure to comply led to a regulatory letter issued on June 10, 2024.
Contrary to Dangote’s claims, Mr. Musa said the Dangote Industries Free Zone Regulation 2020 does not exempt the refinery from paying levies, taxes, or rates to federal, state, and local governments.
The official concluded that Dangote Refinery’s current production capacity cannot meet Nigeria’s domestic demand, necessitating the licensing of other qualified entities to bridge the supply gap.
Justice Ekwo has scheduled January 20,2025, for the report of settlement or service.
