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November 6, 2024
Three marketers, AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited, told a Federal High Court in Abuja that this monopoly would have devastating consequences for the country's oil sector.
Three petroleum marketers have expressed concerns over Dangote Petroleum Refinery and Petrochemicals' plan to monopolise Nigeria's energy sector.
Three marketers, AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited, told a Federal High Court in Abuja that this monopoly would have devastating consequences for the country's oil sector.
The Dangote Oil Refinery, a massive project by Africa's richest man, Aliko Dangote, aims to transform Nigeria's energy sector.
According to the company, once fully operational, it will be the largest refinery in Africa, producing 650,000 barrels per day. While this project promises to reduce Nigeria's dependence on imported petroleum products and create jobs, the marketers claim it will harm the sector.
Dangote Petroleum's lawsuit against the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigeria National Petroleum Company Limited (NNPC), and several other petroleum companies has taken an interesting turn. In their response to the suit filed in September 2024, the defendants claimed that Dangote Petroleum fails to produce enough petroleum products to meet Nigeria's daily needs. They also stated that there's no evidence to contradict this assertion.
The defendants in the lawsuit are NMDPRA, NNPC, AYM Shafa Limited, A.A.Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited as the 1st to 7th Defendants respectively.
In the suit dated September 6, the plaintiff (Dangote Petroleum Refinery and Petrochemicals) prayed the court to declare that NMDPRA is in violation of Sections 317(8) and (9) of the Petroleum Industry Act by issuing licenses for the importation of petroleum products.
According to Dangote Refinery, import licenses for petroleum products should only be granted when there's a proven shortage in domestic production.
This stance is based on Sections 317(8) and (9) of the Petroleum Industry Act (PIA), which restrict the issuance of import licenses to situations where local production can't meet demand.
In essence, the company is advocating for a controlled importation process to ensure that domestic refineries like theirs can meet the country's petroleum needs before resorting to imports.
But the marketers in their response dated November 5, 2024, told the court that they have a “total staff strength of 19,535 employees, majority of whom are Nigerians who earn a living from their remunerations and other fringe benefits accruing to them from the Defendants”.
According to them, the “bulk of the employees of the plaintiff (Dangote Refinery) are foreigners (Indians)”.
They told the court that “withdrawing the import licences lawfully and validly issued to the defendants or denying them further issuance of import licences will not only cripple the lawful businesses of the defendants which contribute immensely to Nigeria’s Gross Domestic Product (GDP) but will inescapably result in mass unemployment in the country, as the defendants will be constrained to retrench majority of their employees due to loss of business and earnings for the companies”.
The marketers said “vesting the Plaintiff with the power of monopoly in Nigeria’s petroleum industry as it seeks vide the instant suit, will kill competitive pricing of petroleum products in the country, further deteriorate Nigeria’s critically ailing economy and unleash untold hardship on Nigerians, all of which constitute a recipe for disaster in the polity”.
“It is in the interest of justice and the best interest of the Federal Republic of Nigeria, that the reliefs sought in the Plaintiff's Originating Summons are refused and the action dismissed with substantial cost,” the marketers told the FCT court.
“That in light of the facts deposed to in this Counter Affidavit, granting the reliefs sought by the Plaintiff will sit Nigeria on a keg of gun powder waiting to explode.
“That the Affidavit in support of the Originating Summons was not deposed to in good faith and in accordance with the Oaths Act, as the facts contained therein are false and the Plaintiff's action brought in bad faith with the sole aim of constituting itself a monopoly in Nigeria's petroleum industry to the grievous disadvantage of Nigeria and Nigerians.”
According to them, the licences being issued to the Defendants by the 1st Defendant do not in any way or manner contravene the provisions of the Petroleum Industry Act, 2021.
They told the court that on the contrary, “any refusal by the 1st Defendant to issue import licences to the Defendants who are well qualified to be issued such licences upon their applications for same in the prescribed manner, thereby vesting the Plaintiff with monopoly in Nigeria's oil industry will be a contravention of the extant Federal Competition and Consumer Protection Act, 2018 and other relevant laws”.
“That the enormous patronage by the 3rd and 4th Defendants of the Plaintiff's refined products in huge sums of U.S Dollars as shown in the preceding paragraphs of this Counter Affidavit shows that the 1st Defendant has been encouraging investment in the Plaintiff's refinery, as enjoined by the provision of Section 317(8) of the Petroleum Industry Act. 2021,” they said.
On Monday, November 4, SaharaReporters exclusively reported that billionaire industrialist Dangote reportedly misled President Bola Tinubu regarding his fuel storage capacity during a recent meeting, claiming to have 500 million litres available.
It was gathered that Dangote was charging ₦990 per litre for loading at his refinery, with a minimum purchase requirement of 1 million litres, all of which must be paid for in advance.
Sources privy to the recent discussions between Dangote and President Tinubu disclosed to SaharaReporters that Dangote misled the president during the meeting by claiming he had 500 million litres of fuel in storage.
"Delays in loading are common. If buying with a vessel, the minimum purchase is 15,000 metric tonnes (approximately 20 million litres) at ₦971 per litre.
"The total cost of chartering a vessel, port fees, and discharge to a private depot is about 60 naira per litre, making the landing cost for private depot owners 971 + 60 naira. This is the reason why private depots are not buying," one of the sources said.
The source told SaharaReporters that as a result, no private depot owner can afford to compete with Dangote.
One of the sources explained that the Independent Petroleum Marketers Association of Nigeria (IPMAN) is unable to purchase because they cannot afford to pay ₦990 million for 1 million litres of PMS.
"Dangote's target is to sell to the Nigerian National Petroleum Company (NNPC) Limited, which will then sell to other distributors," the source said.
One of the sources also revealed that Dangote urged President Tinubu to compel NNPC to purchase fuel from his refinery.
However, President Tinubu reportedly clarified that NNPC would only make purchases if the pricing was deemed reasonable, emphasizing that Dangote should treat NNPC similarly to other oil companies like Total and 11 PLC.
When questioned about the volume of fuel he claimed to have, Dangote reportedly expressed uncertainty about the current naira-to-dollar exchange rate, stating that he was awaiting guidance from NNPC.
"NNPC doesn’t want to buy from Dangote because they must cover their costs while also making a profit, which could lead to higher prices for consumers. NNPC does not want consumers to pay more,” one of the sources said.
The source added that Dangote appeared to be aiming for a subsidy and a monopoly; however, President Tinubu has removed the subsidy, creating an environment conducive to monopoly.
“Dangote’s target is subsidy and monopoly, unfortunately President Tinubu had removed subsidy and this would bring monopoly.
"At the recent meeting, Dangote misled the President, claiming he had 500 million litres in storage. When the President asked him why he was keeping such volume, he stated that he was unsure about the naira-to-dollar exchange rate and was waiting for NNPC to provide a rate.
"The President pointed out that as a smart businessman, he should not need to wait for guidance from NNPC regarding exchange rates.
"Dangote urged the President to force NNPC Retail to purchase his fuel, but the President clarified that NNPC should only buy if the price is right and that Dangote should treat NNPC the same way he would treat Total and 11 PLC (formerly Mobil Oil Nigeria),” the source said.
SaharaReporters also learnt that the billionaire businessman also wanted the President to fix the foreign exchange rate to use but Tinubu declined.