The dispute between the Dangote Petroleum Refinery and the Nigerian National Petroleum Company Limited (NNPCL) has intensified, with fresh allegations of crude supply constraints, regulatory friction, and policy breaches now playing out before the Federal High Court in Lagos.
The refinery has accused the Federal Government and its agencies of undermining its operations through what it describes as inadequate crude oil allocation and the continued issuance of petroleum import licences, despite what it insists is sufficient domestic refining capacity.
In court documents filed as part of an application for interim injunctions, Dangote Refinery argued that the government, through the NNPCL, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has not complied with the spirit and provisions of the Petroleum Industry Act (PIA), particularly those aimed at strengthening local refining and reducing import dependence.
The refinery maintained that its business model is structured around crude supply arrangements with the NNPCL, which is responsible for allocating Federal Government crude to domestic refiners. However, it alleged that current allocations are insufficient, stating that it receives about five crude cargoes monthly, far below the approximately 13 cargoes required to operate at full capacity and meet planned output levels.
This shortfall, according to the company, has forced it to increasingly rely on international crude traders, exposing it to higher procurement costs, premium pricing, and global market volatility. It argued that this reliance undermines the economic advantages expected from a large-scale domestic refinery and increases pressure on retail fuel pricing dynamics in Nigeria.
Dangote Refinery further argued that Nigeria’s downstream sector has reached a stage where local production, including its own output, is capable of meeting or exceeding domestic demand. On this basis, it challenged the continued issuance and renewal of fuel import licences by the NMDPRA, describing the practice as inconsistent with the policy direction of the PIA.
It also raised concerns that continued importation of petroleum products could distort the domestic market, weaken local refining incentives, and reduce investor confidence in Nigeria’s energy sector. The company noted that its investment was made on the expectation of policy stability and regulatory alignment with domestic refining objectives.
In addition, the refinery said it had made repeated attempts to engage relevant government agencies through formal correspondence, including a letter dated June 14, 2024, urging full implementation of the PIA framework and improved coordination of crude allocation and refining policy.
The company also emphasised the scale of its operations, describing itself as one of the largest private employers in Nigeria. It warned that any disruption to its operations could trigger significant employment losses, supply chain instability, and broader economic consequences, particularly in the downstream petroleum market.
Dangote Refinery urged the court to grant interim reliefs restraining the issuance or renewal of import licences, arguing that failure to do so could result in irreparable harm to its investment and Nigeria’s refining ambitions. It maintained that damages would be insufficient compensation if its operational stability is compromised.
However, the Nigerian National Petroleum Company Limited (NNPCL) firmly rejected the allegations, describing them as unfounded. The company stated that it would raise a preliminary objection challenging both the competence of the suit and the legal standing (locus standi) of the refinery to bring the case.
The NNPCL insisted that there has been no deliberate attempt by the government or its agencies to sabotage crude supply to the Dangote Refinery. It maintained that crude allocation processes are guided by contractual arrangements, availability, and broader national obligations, and not by discriminatory or obstructive intent.
The state oil company also defended the role of regulatory institutions, including the NUPRC and NMDPRA, stating that they have acted within their statutory mandate under the PIA. It further argued that the issuance of import licences remains within regulatory discretion and is influenced by the need to ensure energy security and market stability.
According to the NNPCL, petroleum products from the Dangote Refinery are already active in the domestic market and are priced according to prevailing commercial conditions, which are influenced by global crude benchmarks, logistics, and refining economics.
The ongoing legal battle is widely seen as a significant test of Nigeria’s post-PIA petroleum governance structure, particularly the balance between encouraging domestic refining capacity and maintaining competitive market dynamics. Analysts say the outcome could have far-reaching implications for crude allocation policy, import licensing frameworks, and investor confidence in the downstream oil and gas sector.