Oil Industry Clash: Dangote Refinery Seeks Injunction Against NNPCL's Petroleum Imports

Dangote Refinery Takes on NNPCL, Others in Court Over Import Licenses

Dangote Refinery's legal team is sounding the alarm, stating that the company is extremely...

Dangote Refinery Seeks Court Protection: Nigeria's first indigenous refinery fights NNPCL and NMDPRA over import licenses and taxes.

Dangote Refinery is taking bold action against the Nigeria National Petroleum Company Limited (NNPCL) and other companies to stop petroleum product importation into the country. They've filed a case at the Federal High Court in Abuja, seeking to void import licenses issued to NNPCL, Matrix Petroleum Services Limited, A. A. Rano Limited, and four other companies. The reason? Dangote Refinery is already producing refined petroleum products without shortfalls, making these imports unnecessary.

Defendants in the Case:

• Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)
• Nigeria National Petroleum Company Limited (NNPCL)
• Aym Shafa Limited
• A. A. Rano Limited
• T. Time Petroleum Limited
• 2015 Petroleum Limited
• Matrix Petroleum Services Limited

Dangote Refinery is also demanding N100 billion in damages from NMDPRA for allegedly issuing import licenses to these companies despite Dangote's sufficient production. The products in question include Automotive Gas Oil (AGO) and Jet Fuel (aviation turbine fuel). With Dangote Refinery producing more than enough to meet Nigeria's daily consumption, they're seeking to protect their interests and prevent unnecessary imports. The case number is FHC/ABJ/CS/1324/2024.

Dangote Refinery's lawyer, Ogwu James Onoja, has filed a court summons asking the court to declare NMDPRA's issuance of import licenses for petroleum products a violation of the Petroleum Industry Act. Specifically, Onoja argues that these licenses should only be issued when there's a product shortfall, which isn't the case here since Dangote Refinery already produces enough to meet Nigeria's daily consumption.

According to Ahmed Hashem, Dangote Refinery's Group General Manager of Government and Strategic Relations, NMDPRA's actions are crippling their business. With billions of US dollars invested, Dangote Refinery's products are being left unsold due to the import licenses granted to other companies for AGO and Jet-A1.

Points of the Court Summons:

Violation of Petroleum Industry Act: NMDPRA allegedly violating Sections 317(8) and (9) by issuing import licenses without a petroleum product shortfall.

Lack of Support for Local Refineries: NMDPRA failing to encourage local refineries like Dangote Refinery.

Business Impact: Import licenses harming Dangote Refinery's business and leaving their products unsold.

Financial Investment: Dangote Refinery has committed substantial financial resources in billions of US dollars.

The case, filed on September 6, 2024, names NMDPRA, NNPCL, and five other companies as defendants, seeking N100 billion in damages.

Dangote Refinery is facing a major challenge from NMDPRA, which has threatened to impose a 0.5% levy on wholesale and off-taker transactions, as well as an additional 0.5% levy on wholesale transactions to the Midstream and Downstream Gas Infrastructure Fund (MDGIF). This move is contrary to statutory provisions that exempt Free Zones from such levies. The refinery's lawyers argue that Free Zones were established to boost competition, attract foreign investment, and create tax-free havens.

Alleged Conspiracy

Dangote Refinery also claims there's a grand conspiracy involving international oil companies and interests, working with NMDPRA and other defendants, to undermine Nigeria's first indigenous refinery. The refinery is poised to resolve the country's energy crisis and boost the economy, but these entities allegedly want to disrupt its progress.

Concerns:

Levy Imposition: NMDPRA's threatened levies contradict statutory provisions.

Free Zone Purposes: Free Zones aim to foster competition, attract investment, and create tax havens.

Conspiracy Allegations: International oil companies and interests may be working against Nigeria's indigenous refinery.

“The intervention of the Honourable Court has become necessary in order to stem the incessant violation of statutory provisions by the 1st Defendant in favor of other entities such as the 2nd to 7th defendants,” the plaintiff stated.

Dangote Refinery's legal team is sounding the alarm, stating that the company is extremely distressed and its investments are at risk unless the court steps in. To address this, they're seeking a court order to stop the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) from issuing or renewing import licenses to other companies, including the Nigeria National Petroleum Corporation Limited (NNPCL) and Matrix Petroleum Services Limited, for bringing in petroleum products.

Requested Court Orders:

Injunction Against Import Licenses: Prevent the NMDPRA from issuing or renewing licenses to affected companies.

General Damages: Award N100 billion against NMDPRA for allegedly issuing unauthorized import licenses.

Sealing of Storage Facilities: Direct the NMDPRA to seal off tank farms, storage facilities, warehouses, and stations used by defendants for storing imported refined petroleum products.

The refinery's lawyer emphasized that unless the court intervenes, the company's investments will be jeopardized. They're seeking protection for their business, which is Nigeria's first indigenous refinery, poised to resolve the country's energy crisis and boost the economy.

Dangote Refinery is seeking legal clarity on its tax status as a Free Zone Enterprise. They're asking the court to declare that, based on various laws and regulations (including NEPZA, CIT Act, and Finance Act), they're exempt from federal, state, and local taxes.

Dangote Refinery and NNPCL have been at odds since September, disagreeing on prices and other issues.