Three major oil companies Matrix Petroleum, A.A. Rano, and AYM Shafa have taken legal action at the Federal High Court in Abuja, contending that only the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian National Petroleum Corporation Limited (NNPCL) have the statutory authority to assess and declare any petroleum product shortfall in the country. The companies argue that the Dangote Refinery lacks jurisdiction in such matters and that recent attempts to impose restrictions or revoke their import licences lack a legal basis.
In a counter-affidavit filed on November 5, 2024, the companies assert that under Section 317(9) of the Petroleum Industry Act (PIA), NMDPRA and NNPCL have the exclusive mandate to determine if there is an actual shortfall in the supply of petroleum products within Nigeria. Their lead counsel, Ahmed Raji, SAN, argued that only these two regulatory bodies can define and verify shortfall status, asserting that Dangote Refinery’s claims of production capacity should not influence the country’s policy on import licences or restrict imports from other qualified oil firms.
This stance is rooted in concerns over market stability and national security in energy supply. The companies suggest that an accurate and unbiased assessment of supply needs should not be based solely on the presence of local refining facilities like Dangote’s. According to their submission, the court is being asked to ensure that NMDPRA and NNPCL maintain control over market determinations, citing that NMDPRA’s assessments should not be overturned without judicial review, especially given their statutory role in safeguarding national interests in the oil and gas sector.
Dangote’s Suit and Market Implications
This case comes amid Dangote Refinery’s high-profile lawsuit seeking a court order to nullify import licences granted to NNPCL and five other companies for refined petroleum products. The refinery, which has begun domestic production, contends that it can supply Nigeria’s demand without imports, arguing this would reduce reliance on foreign supply chains. However, the three defendants, represented by Raji, argue that Dangote’s production, while substantial, has yet to meet the nationwide daily demand consistently.
The defence also highlights the global practices of securing energy supply chains, especially in developing economies, as justification for maintaining a diverse set of petroleum sources. “Nigeria’s energy security,” the companies argue, “should not be compromised by over-reliance on a single domestic producer.” The defendants urge the court to dismiss the Dangote suit, reinforcing the need for competitive imports as a buffer against potential disruptions or shortfalls.
Calls for Legal Precision and Procedural Compliance
The defence contends that Dangote’s case improperly attempts to overrule an administrative decision by NMDPRA and should have been pursued through judicial review as per Federal High Court Civil Procedure Rules, Order 34. By filing under an originating summons, the plaintiffs have sidestepped proper channels, the defendants argue, making it difficult to address the legality of NMDPRA’s import licensing powers comprehensively.
A Potential Settlement and Future Proceedings
The case has attracted significant attention, with a statement from Dangote Group’s Communications Officer, Anthony Chiejina, suggesting plans to withdraw the lawsuit by January 2025 following discussions initiated by President Bola Tinubu. This development underscores the ongoing negotiations between Dangote and other stakeholders, hinting at potential policy adjustments that could address issues of foreign exchange and pricing for petroleum imports. The case is set to resume on January 20, 2025, potentially marking a turning point for Nigeria’s downstream petroleum policy and regulatory landscape.
The outcome of this legal dispute may shape the future of Nigeria’s petroleum import policies, balancing local production capabilities with the need to ensure a reliable energy supply chain and maintain regulatory clarity.