By DAYO ADESULU
Three major oil marketers—AYM Shafa Limited, A.A. Rano Limited, and Matrix Petroleum Services Limited have urged Nigeria’s Federal High Court to reject a lawsuit filed by Dangote Petroleum Refinery and Petrochemicals, which seeks regulatory support for market exclusivity in petroleum production and distribution. The marketers argue that Dangote’s demand for market control could lead to economic instability and heightened energy prices.
Marketers Challenge Dangote’s Monopoly Claims in Court
In a counter-affidavit filed under case number FHC/ABJ/CS/1324/2024, the marketers countered Dangote’s bid, stating that granting the company’s request would harm the oil sector and create a monopolized environment. The oil companies emphasize that a single-entity monopoly would likely destabilize competitive pricing and adversely affect Nigeria’s economy.
Dangote Seeks Market Exclusivity Amidst Claims of Supply Inadequacy
In its original suit, Dangote Refinery challenged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigeria National Petroleum Corporation (NNPC), along with the defendant marketers, accusing them of breaching Sections 317(8) and (9) of the Petroleum Industry Act (PIA). Dangote asserts that NMDPRA’s issuance of import licenses undermines its efforts to boost domestic refining.
Marketers Defend Right to Import Licenses
The marketers argue they are legally entitled to import petroleum products as NMDPRA-compliant entities under Section 317(9) of the PIA. They note that they meet all requirements for import licenses and that these licenses do not inhibit Dangote’s refinery operations.
Risks of Market Monopoly: Higher Prices and Energy Crisis
The defendants warn that exclusive market control by Dangote Refinery could lead to price hikes and jeopardize energy security. “A monopoly in Nigeria’s oil sector would ultimately bring untold hardship on consumers, destabilizing the economy and creating a single-point dependency,” they argued, adding that a monopoly would leave Nigeria vulnerable to supply shocks should the refinery face production issues.
International Players and Market Impact: Foreign Buyers Dominate Dangote’s Supply
Meanwhile, a Bloomberg report highlights that 75% of Dangote’s output is purchased by foreign firms, with Vitol Group, Trafigura Group, and BP Plc among the primary buyers. Local buyers account for only 25% of Dangote’s sales. The refinery, which began production earlier this year, processes about 420,000 barrels daily, with diesel and fuel oil constituting over 60% of its exports.
Key Production Insights: Dangote’s Refinery Output Composition
The report notes that Dangote’s facility primarily produces automotive gas oil (diesel) and fuel oil, followed by gasoline and jet fuel. As operations progress, Dangote is expected to fully utilize its capacity of 650,000 barrels per day, making it one of the largest refineries in Africa and reshaping regional oil trading.
Conclusion:
The court’s decision on Dangote’s lawsuit could have far-reaching implications for Nigeria’s petroleum industry. While Dangote aims to strengthen local refining, other marketers argue for competitive dynamics to avoid monopoly-driven price inflation.
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