Oil Marketers Sue Dangote Over Petrol Import Monopoly

Dangote Faces Legal Challenge from Oil Marketers Over Import Monopoly

Dangote's initial suit, filed on September 6, 2024, claims that the Nigeria...

Dangote Refinery files N100 billion lawsuit against NMDPRA for issuing import licenses to NNPC and other companies.

Three oil marketers, AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited, have filed a counter-suit at the Federal High Court in Abuja to dismiss a case by Dangote Petroleum Refinery and Petrochemicals.

Dangote's initial suit, filed on September 6, 2024, claims that the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigeria National Petroleum Company Limited (NNPCL) violated the Petroleum Industry Act (PIA) by issuing import licenses for petroleum products. Specifically, Dangote argues that these licenses should only be issued when local production cannot meet demand, alleging the authorities failed to support local refineries.

The dispute centers around Dangote Refinery's production of Automotive Gas Oil (AGO) and Jet Fuel (aviation turbine fuel), which exceeds Nigeria's daily consumption. Dangote seeks N100 billion in damages against NMDPRA for continuing to issue import licenses to NNPCL and other companies, including AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited.

Counterarguments by Marketers

The oil marketers countered Dangote's move, asserting that monopolizing Nigeria's oil market would have devastating consequences. They highlighted that Dangote's refinery currently cannot meet national demand, necessitating import licenses to prevent crippling shortages.

Qualifications and Competition

The marketers emphasized their qualification under the Petroleum Industry Act (PIA) to import petroleum products. Restricting imports, they argued, would stifle competition, harm the economy, and exacerbate hardship for Nigerians.

Economic and Security Concerns

Relying solely on Dangote's refinery poses significant risks, the marketers warned. Production delays or disruptions could plunge Nigeria into crisis, given the country's inadequate fuel reserves. This underscores the importance of maintaining import licenses to ensure market stability.

The Dangote Refinery's Impact

The Dangote refinery, operational since 2024, has transformed Nigeria's oil sector. Producing 420,000 barrels daily, it supplies diesel, jet fuel, LPG, and gasoline. By late 2024, Dangote dominated the local diesel and fuel oil market, reducing Nigeria's reliance on imports.

Export Dynamics

Despite local market dominance, Dangote's exports primarily go to three foreign firms: Vitol Group, Trafigura Group, and BP Plc, accounting for 75% of total fuel exports.

Marketers' Concerns

The marketers' counter-suit raises concerns about energy security, competitive pricing, and monopoly risks. They argue that sole reliance on Dangote could:

• Eliminate competition
• Lead to price hikes
• Destabilize the sector
• Expose Nigeria to production and pricing disruptions

Legal Proceedings

Justice Inyang Ekwo has scheduled a January 2025 hearing to explore potential settlements.

Regional Implications

As Dangote refinery approaches full capacity (650,000 barrels/day), its impact on African and European fuel markets is closely watched. Africa's largest refinery is poised to surpass European refinery output, reshaping global oil trade.