Three oil companies—Matrix Petroleum Services Limited, A.A. Rano Limited, and AYM Shafa Limited—have asked the Federal High Court in Abuja to prohibit the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) from reviewing or withdrawing their import licenses.
They also asked the court not to block them from importing petrol in the interest of energy security and promotion of healthy competition in the Nigerian oil and gas sector.
This is stated in their court processes in response to the suit filed by Dangote Petroleum Refinery and Petrochemicals FZE, which is seeking to void the import licenses issued to the Nigerian National Petroleum Corporation Limited (NNPCL) and five other companies for importing refined petroleum products that Dangote already produces domestically, without any shortages.
In their written address and counter-affidavit, dated November 5, 2024, and filed by Ahmed Raji SAN, it was submitted that the businesses of the defendants do not in any way hamper, disrupt, or harm Dangote Refinery’s operations.
The three defendants claim the plaintiff allegedly seeks to monopolize the petroleum industry in Nigeria, where it alone would control supply, distribution, and pricing.
Raji emphasized that countries worldwide ensure energy security, pointing out that even nations like the United States—where oil reserves and refining capacity are far greater than Nigeria’s—still import and store petroleum products to safeguard against unforeseen circumstances and ensure steady supply, thus ensuring energy security.
Dangote Refinery’s Claims in Court and the Defendants’ Fresh Counterclaims
In suit number FHC/ABJ/CS/1324/2024, Nairametrics exclusively reported that Dangote Refinery seeks N100 billion in damages against NMDPRA for allegedly continuing to issue import licenses to NNPCL, Matrix, and other companies for importing petroleum products such as Automotive Gas Oil (AGO) and Jet Fuel (Aviation Turbine Fuel), “despite Dangote Refinery producing AGO and Jet-A1 in quantities exceeding the current daily consumption of petroleum products in Nigeria.”
The defendants in the case include NMDPRA, NNPCL, AYM Shafa Limited, A.A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited (1st to 7th defendants).
- In the originating summons, dated September 6, 2024, and exclusively seen by Nairametrics, the plaintiff’s lawyer, Ogwu James Onoja SAN, asked the court to declare that NMDPRA is allegedly in violation of Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licenses for petroleum products. He argued that such licenses should only be granted in cases of petroleum product shortages.
- He also urged the court to declare that NMDPRA violated its statutory responsibilities under the PIA by not encouraging local refineries such as Dangote Refinery.
- At the first hearing in October, before Justice Inyang Ekwo, George Ibrahim SAN, counsel for the plaintiff, informed the judge that discussions were underway between the parties to potentially settle the matter.
- He requested an adjournment to allow the parties time to reach a settlement, suggesting that the court should adjourn for a report on the settlement or the status of service.
The judge granted the adjournment.
In the defendants’ affidavit, deposed by Ali Ibrahim Abiodun, Acting Managing Director of AYM Shafa (with the consent and authority of Matrix, A.A. Rano, and AYM), it was stated that the defendants are qualified and capable of being licensed as importers of refined petroleum products under Section 317(9) of the PIA and that their licenses to import such products were lawfully issued by the appropriate authority, NMDPRA.
- The affidavit further stated that since Dangote Refinery began refining petroleum products, AYM Shafa has been a major purchaser from the plaintiff, having acquired about 116,000,000 liters of AGO and hundreds of metric tons of Premium Motor Spirit (PMS), despite Dangote’s alleged inability to meet the full demand.
- The deponent claimed that it typically takes an average of two months for Dangote Refinery to fulfill orders and that it rarely meets demand, with trucks waiting for months to be loaded at the refinery.
- In contrast, he claimed it takes about three weeks to import petroleum products from offshore refineries.
- The affidavit revealed that A.A. Rano’s oil depot in Lagos has a storage capacity of 55,000,000 liters and can load about 200 trucks per 24 hours.
- The deponent stated that the company also owns 220 filling stations and another 85 affiliates and leased filling stations.
According to the deponent, AA Rano was one of the first to take delivery of AGO from Dangote Refinery, loading 20,000 MT of AGO on or about April 16, 2024, and has since purchased and loaded additional cargoes totaling approximately 190,000,000 liters.
Despite this patronage, the affidavit claimed that Dangote Refinery has continued to place obstacles that make it difficult for A.A. Rano to purchase products solely from the refinery.
“Oil, in both its crude and refined forms, is an international commodity that is traded globally, and there are universally accepted trade practices and platforms that ensure fairness and sanctity of contracts in the industry,” the deponent stated.
He further argued that the plaintiff has abandoned fair trade practices, instead introducing a policy requiring buyers to deposit 110% of the value of their orders in Letters of Credit (LC), with the actual price of the product only being disclosed five days after the LC date, that is after the product has been loaded from Dangote’s refinery.
He stated that this practice allegedly leaves buyers uncertain of the final cost until after delivery, often forcing them to sell at a loss and places marketers, consumers, and Nigeria at the mercy of the plaintiff.
“The landing costs of imported products, including shipping, insurance, and customs charges, are cheaper than the wholesale price being offered by the plaintiff for its products, which are not subject to customs duties and are less expensive to transport to our depots,” the affidavit stated.
The senior lawyer emphasized that his clients have never obtained any advantage that would disadvantage or harm the plaintiff.
He urged the court to dismiss the suit.
Nairametrics reports that the case is set for a hearing on January 20, 2025, for a status report.
What You Should Know
When Dangote’s lawsuit became public, the Dangote Group later issued a statement describing the lawsuit against NNPC Limited and other oil companies as “an old issue.”
- In a statement on October 21, 2024, the group’s communications officer, Anthony Chiejina, clarified that Dangote Refinery plans to withdraw the suit by January 2025.
“This is an old issue that began in June and culminated in a matter being filed on September 6, 2024,” the statement read.
“Currently, the parties are in discussion following President Bola Tinubu’s directive on Crude Oil and Refined Products Sales in Naira, which was approved by the Federal Executive Council (FEC). We have made significant progress, and events have since overtaken this development.”
“No party has been served with court processes, and there is no intention to do so. We have agreed to put a halt to the proceedings. It is important to stress that no orders have been made, and there are no adverse effects on any party. We expect to formally withdraw the matter in court in January 2025.”
Recall that Africa’s wealthiest man, Aliko Dangote, had announced his willingness to sell his multibillion-dollar oil refinery to the state-owned energy company, NNPC Limited.
This decision came amid escalating disputes with regulatory authorities and equity partners, prompting reflection on his investment choices in Nigeria.
Dangote was also seen alleging the importation of substandard petroleum products into Nigeria by others.
Nairametrics previously reported that the federal government later granted marketers the license to buy petroleum products directly from the Dangote refinery following NNPC’s decision to quit as the middleman between the two parties.