Dangote Refinery Takes Legal Action Against NMDPRA, Importers Over Fuel Licenses

Dangote Petroleum Refinery and Petrochemicals has filed a lawsuit against the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and several major fuel importers in the Federal High Court in Abuja. The suit, identified as FHC/ABJ/CS/1324/2024, seeks N100 billion in damages from NMDPRA for allegedly continuing to issue import licenses for refined products like Automotive Gas Oil and Jet-A1 (aviation fuel), despite Dangote’s claims that its refinery output surpasses domestic consumption.

Dangote’s legal team argues that the ongoing imports are unnecessary, as the refinery is producing sufficient quantities of these products. However, oil marketers contend that the market is deregulated, allowing them the freedom to import these commodities or purchase them from the new Lekki-based refinery.

The lawsuit also targets the Nigerian National Petroleum Corporation Limited (NNPCL), Matrix Petroleum Services Limited, A.A. Rano Limited, and four other companies, seeking the cancellation of their import licenses. Dangote alleges that the actions of these importers are sabotaging its operations by saturating the market with products it is capable of supplying without shortfalls.

In the court documents, Dangote contends that NMDPRA has violated sections of the Petroleum Industry Act (PIA) by issuing import licenses without evidence of any product shortfalls, neglecting its responsibility to support local refineries. Ahmed Hashem, the refinery’s General Manager for Government and Strategic Relations, stated in an affidavit that the importation of AGO and Jet-A1 has severely disrupted the refinery’s business, leaving its products largely unsold.

The affidavit emphasizes that “the plaintiff is distressed greatly, and its business activities and investments are being jeopardised and may get worse by the day unless the Honourable Court intervenes.” Furthermore, Dangote claims that NMDPRA has threatened to impose a 0.5% levy on wholesale buyers and another 0.5% for the Midstream and Downstream Gas Infrastructure Fund, actions which the refinery argues contradict free zone regulations aimed at fostering competition and attracting investment.

The refinery also alleges that international oil companies are colluding with the defendants to undermine Nigeria’s indigenous refining efforts. It states that “these companies and entities are doing everything to sabotage the operation of the plaintiff and have been sponsoring the media to come up with all sorts of stories and untrue statements.”

In addition to monetary damages, Dangote seeks a declaration that it is exempt from federal, state, and local taxes based on various Nigerian laws. The company demands that the court prevent NMDPRA from issuing any further import licenses to the implicated firms and seeks orders to seal their facilities involved in storing imported products.

During a recent court hearing, Dangote’s counsel, George Ibrahim SAN, informed Justice Inyang Ekwo that discussions for a possible settlement were ongoing. The judge set January 20, 2025, for a report on these discussions or for service of the summons.

In response to inquiries about the lawsuit, NMDPRA spokesperson George Ene-Ita stated that the authority had not been served any summons related to the case. Meanwhile, NNPCL spokesperson Femi Soneye offered a brief reply via a WhatsApp sticker.

Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, emphasized that the Petroleum Industry Act allows NMDPRA to issue import licenses to qualified companies, asserting that the market remains open. He noted, “The worst case scenario is that the Central Bank of Nigeria will say they don’t have foreign exchange to give them, so if they have a way of working out trading values, the company is allowed to import products into Nigeria.”

Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, expressed surprise at the lawsuit, stating that the market is now liberalized, allowing marketers to import if their costs are competitive.

Sources within Dangote’s operations indicated that recent developments have overtaken the case, suggesting the company plans to withdraw the lawsuit formally in January. Anthony Chiejina, the Group’s Chief Branding and Communications Officer, clarified that this was not a new case and arose from earlier issues, emphasizing ongoing discussions in light of recent government directives regarding crude oil and refined product sales.

Marketers expressed their astonishment at the lawsuit, asserting that no laws prohibit the importation of petroleum products, regardless of local refining capacity. They requested to see the court documents before making any further comments, with one marketer stating, “What I know is there is no law in Nigeria that bans the importation of fuel.” Another added, “It would be against the Petroleum Industry Act to stop marketers from importing fuel; the case is dead on arrival.”