In a high-stakes legal battle that could significantly alter the dynamics of Nigeria’s petroleum industry, the Federal High Court in Abuja has adjourned a lawsuit filed by Dangote Petroleum Refinery and Petrochemicals FZE to January 30. The suit, which seeks to nullify oil import licenses issued to several major marketers, also demands N100 billion in damages from the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and six other defendants. This landmark case has the potential to reshape the regulatory framework of Nigeria’s oil importation and local refinery operations.
The lawsuit, tagged FHC/ABJ/CS/1324/2024, pits Dangote Refinery against an array of powerful entities, including the Nigerian National Petroleum Corporation Limited (NNPCL), as well as prominent oil marketers such as AYM Shafa Limited, A.A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited. At the core of the case is Dangote Refinery’s contention that the issuance of import licenses by the NMDPRA violates Sections 317(8) and (9) of the Petroleum Industry Act (PIA), which stipulates that such licenses should only be granted in the event of proven local supply shortages.
In its originating summons, Dangote Refinery alleges that the NMDPRA has failed to prioritize local refineries as mandated by the PIA, thereby undermining the growth of domestic production capacity. The refinery argues that the continued issuance of import licenses creates an uneven playing field and stifles the development of local refining infrastructure. Consequently, the company has requested the court to annul the import licenses granted to the defendants and to award N100 billion in damages as compensation for the regulatory body’s alleged negligence.
The defendants, however, have mounted a robust defense. Major oil marketers, including AYM Shafa Limited, A.A. Rano Limited, and Matrix Petroleum Services Limited, have argued that the import licenses are lawful and consistent with the PIA and other relevant legislation, such as the Federal Competition and Consumer Protection Act. They contend that Dangote Refinery lacks the capacity to meet Nigeria’s daily consumption needs and that monopolizing the sector in favor of a single refinery would have far-reaching consequences for the country’s economy.
The marketers further caution that granting Dangote Refinery exclusive control over petroleum imports could destabilize the market, drive up prices, and eliminate competition. They warn that relying solely on Dangote Refinery for petroleum products could lead to significant supply disruptions and higher costs if operational challenges were to arise at the facility. Their counterarguments underscore the broader economic implications of the case, particularly in a nation that heavily relies on imported refined products to meet local demand.
During the hearing on Monday, George Ibrahim (SAN), counsel for Dangote Refinery, sought the court’s leave to amend the originating summons, citing procedural errors in the initial filing. However, the court noted that the amended summons had not been properly served to the defendants. Justice Inyang Ekwo, presiding over the case, emphasized the need for procedural compliance, instructing the plaintiff to ensure proper service before the next hearing.
The defendants’ counsels, including Mathew Bukar (SAN), who represented the NMDPRA, and Ahmed Raji (SAN), representing AYM Shafa, A.A. Rano, and Matrix Petroleum, also pointed out that they had not been served with the amended documents. Justice Ekwo, in response, adjourned the case to January 30, granting Dangote Refinery’s counsel additional time to complete the filing and service of all court processes.
Meanwhile, another party represented by Olanrewaju Oshinaike sought to join the matter but was asked to stand down until the issue of service was resolved. Justice Ekwo reiterated the importance of ensuring that all legal protocols were followed to avoid further delays in the case.
This lawsuit comes at a critical time for Nigeria’s oil and gas industry, which is grappling with the challenges of implementing the Petroleum Industry Act. The PIA, signed into law in 2021, was designed to attract investment, enhance local refining capabilities, and reduce the country’s dependence on imported petroleum products. However, critics argue that the continued issuance of import licenses undermines these objectives, perpetuating a reliance on foreign imports and discouraging the development of local refineries.
If Dangote Refinery succeeds in its claims, the ruling could compel the NMDPRA to overhaul its licensing practices and prioritize local production, aligning with the PIA’s vision of a self-sufficient petroleum industry. Such a decision would have significant ramifications for the Nigerian economy, potentially reducing the outflow of foreign exchange and creating new opportunities for domestic players.
On the other hand, a dismissal of the case would reinforce the status quo, allowing multiple players to remain active in the oil importation sector. This outcome could ensure competition and prevent the risks associated with over-reliance on a single refinery. However, it could also prolong Nigeria’s dependence on imported refined products, with its attendant economic and policy challenges.
As the case progresses, stakeholders within and outside Nigeria are closely monitoring the developments. The outcome could set a precedent for the enforcement of the PIA and influence the trajectory of the country’s energy sector for years to come.
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