Three major oil marketers – AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited – are challenging Dangote Refinery’s bid for a monopoly on Nigeria’s petrol import market.
They claim that Dangote’s refinery cannot meet the daily fuel demands of Nigerians, which could lead to supply shortages and destabilize the nation’s energy sector.
The marketers argue that relying solely on Dangote Refinery would result in higher prices and increased economic hardship for Nigerians. They also pointed out that Dangote Refinery has not provided evidence to contradict their claims.
In fact, Dangote Refinery only recently commenced production of Premium Motor Spirit (PMS) in September 2024, with a capacity of 650,000 barrels per day. While this is a significant development, the marketers contend that it’s still insufficient to meet Nigeria’s daily fuel needs.
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.
They told the court that it takes average of two months for the Plaintiff (Dangote Petroleum Refinery and Petrochemicals FZE) to supply products ordered from it, adding that it “hardly ever meets the demand, as trucks wait for months to be loaded at the Plaintiff’s refinery, whereas it takes about three weeks to import petroleum products from offshore refiners”.
In the affidavit which was deposed by one Ali Ibrahim Abiodun, Acting Managing Director of the 3rd Defendant, (AYM Shafa Limited), told the court that there is no credible and verifiable “forensic material before it showing that the local consumption rate of Automotive Gas Oil (AGO) in Nigeria per day is 14 million litres or that the Plaintiff produces 15 million litres per day.
“That there is no credible and verifiable forensic material before this Honourable Court showing that the local consumption rate of Jet fuel (Jet A-1) in Nigeria is 2.5 million litres per day or that the Plaintiff produces 7.5 million litres of Jet fuel (Jet A-1) per day.
“That again, no credible and verifiable forensic piece of evidence is before this noble Court showing that the Plaintiff has the capacity to produce uninterruptedly 35 million litres of Automotive Gas Oil (AGO) and 9 million Jet A-1 products per day.
“That in light of the above, there is nothing before this Honourable Court showing that the Plaintiff is refining and supplying adequate petroleum products for the daily use/consumption of Nigerians,” he maintained.
The Defendants accused the plaintiff of jettisoning fair practice and introduced an oppressive trade practice which requires a buyer to deposit 110% in Letters of Credit (LC) of whatever quantity it wants to off-take and the off-taker is told of the actual price it would pay for what it has off-taken 5 days from the date of the LC date (i.e. after loading the product from the Plaintiff’s refinery.
“That the buyer therefore does not know at what price it is buying until it has taken delivery and is most probably already selling to its customers at a price below its cost price.”
The Defendants further told the court that healthy competition in businesses, trade and investment is the hallmark of a progressive, developing and developed economy.
“That amidst the glaring absence of any credible and demonstrable proof that the Plaintiff refines and supplies adequate petroleum products for the daily use/consumption of Nigerians, giving the Plaintiff judicial imprimatur to be the sole supplier of refined petroleum products to Nigerians, thereby encouraging monopoly in a major aspect of Nigeria’s oil industry, is a recipe for disaster in Nigeria’s energy sector.”
“That granting the reliefs sought by the Plaintiff which solely aim at making the Plaintiff a monopolist in Nigeria’s petroleum sector is a design to leave Nigeria and Nigerians at the mercy of the Plaintiff with respect to availability and cost of purchasing petroleum products in the Country.
The Defendants, however, maintained that since the Plaintiff claimed that it has been importing crude oil to Nigeria, that nothing as well stops it from exporting its products, while avowed that, one of the foundational purposes of establishing Free Zones is “to foster competition.”
“Defendants have never engaged in and do not engage in any activity capable of preventing the Plaintiff’s refinery or any other domestic refinery from surviving.”
The Federal High Court in Abuja is set to hear the case, with the marketers seeking to dismiss Dangote’s suit. They argue that granting Dangote a monopoly would harm Nigeria’s economy and inflict hardship on its citizens. The court has fixed January 20, 2025, for a report of settlement or service.
