… Asks Court To Stop PMS Importation, Demands N100bn Compensation From NMDPRA
…Dangote’s Court Request May Threaten Energy Security, Competitive Pricing
…Court Case Seeking Ban On PMS Importation To Be Withdrawn In January- Dangote
In a bid aimed at becoming the dominant force in the oil and gas sector as well as achieving full monopoly in the supply of petroleum products in Nigeria, Dangote Refinery and Petrochemical Company Ltd has asked the Federal High Court in Abuja to stop the importation of refined petroleum products that are already being produced by the Refinery.
The Refinery is also seeking N100bn in damages from the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for allegedly continuing to issue licenses to companies for importing petroleum products such as Automotive Gas Oil (AGO) and Jet Fuel (aviation turbine fuel) into Nigeria, “despite the production of AGO and Jet-A1 that exceeds the current daily consumption of petroleum products in Nigeria by the Dangote Refinery.”
In addition to a restraining order against the import licenses of the affected companies, the plaintiff is seeking general damages in the sum of N100bn against NMDPRA and an order of the court directing the regulator to seal off all tank farms, storage facilities, warehouses, and stations used by the defendants for the storage of all refined petroleum products imported into Nigeria.
The move is widely seen by industry stakeholders as part of Dangote’s strategy to create a monopoly for his refinery as well as make the pricing of petroleum products less competitive.
The plan by Dangote to use the court to stop the importation of petrol is also seen by industry watchers as an attempt by the Refinery to usurp the powers of the NMDPRA and other regulators.
This, according to stakeholders, is a contravention of the provisions of the Petroleum Industry Act 2021, particularly in the area of guaranteeing energy security, affordability, and accessibility.
Section 205 of the PIA provided that the government will no longer control the prices and supply of petroleum products such as kerosene, petrol, diesel, and LPG.
The Act stipulated that market forces (private sector players) will regulate the products through a competitive process under a willing buyer-willing seller arrangement.
This section of the law aims to attract private investments and create a competitive and efficient market that ensures the availability, affordability, and reliability of petroleum products.
The goal is to also ensure that citizens have reliable and affordable access to petroleum products.
NewsNGR had reported that in a bid to demonstrate its readiness towards buying petrol from Dangote Refinery Petrochemical Company Ltd, the NNPC Ltd had mobilised 500 trucks to the facility on September 15 this year.
The truck was to enable NNPC Ltd to lift petrol from the Dangote Refinery under the naira for crude sale arrangement.
Recall that the Federal Executive Council, under the leadership of President Bola Tinubu, had in July approved the sale of crude to Dangote and other local refineries in Naira and the corresponding purchase of petroleum products in Naira.
This initiative will help reduce pressure on the Naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products in the country.
Since then, the implementation committee chaired by the Minister of Finance, Mr Wale Edun and the technical committee have worked intensely with NNPC Ltd and Dangote Refinery to fashion out the details of the modalities for the implementation of the FEC approval
Based on the agreement between Dangote and NNPC Ltd, the Refinery is to supply 25 million litres per day to NNPC in September, 30 million litres per day in October and 35 million litres per day in November.
This is expected to enable NNPC Ltd to guarantee energy security for Nigerians in line with the provisions of the PIA 2021.
However, the Dangote Refinery, according to NewsNGR findings, has not been able to meet that commitment to NNPC Ltd in line with the terms of the agreement.
Investigations by NewsNGR revealed that from the 400 million litres of petrol that Dangote Refinery ought to supply NNPC Ltd in September, only 103 million litres were delivered. This represents a paltry 26 per cent of the PMS demanded by the NNPC.
NewsNGR findings further revealed that in October, Dangote Refinery PMS supply commitment to NNPC was 665 million litres out of which only 214 million litres have been met resulting in a shortfall of 78 per cent.
It was gathered that from September 15 when NNPC started lifting petrol from Dangote Refinery to October 20 this year, only 317 million litres of PMS has been supplied to the National Oil Company out of a total commitment of 1.065 billion litres of petrol.
Data analysed by NewsNGR showed that the 317 million litres represent just 29.76 per cent of the PMS demanded by NNPC from the Dangote Refinery.
This, according to NewsNGR investigation, leaves a shortfall of about 748 million litres of petrol from Dangote Refinery that are yet to be supplied to NNPC Ltd.
The implication of this is that with Dangote’s undersupply of PMS to NNPC by 70 per cent, it may create an energy crisis for Nigeria if steps are not taken by the National Oil company to bridge the fuel supply gap through other sources such as petrol importation.
With the order of injunction being sought by Dangote Refinery stopping NMDPRA from renewing import licenses to companies to import petroleum products, experts have said the huge supply shortfall by Dangote Refinery will create fuel scarcity for Nigerians as well as lead to further hikes in the price of petrol by black marketers as demand will far outweigh supply.
Reacting to the development, Dangote said in a statement that the case is an old issue that started in June and culminated in a matter being filed on September 6, 2024.
He said, “Currently, the parties are in discussion since President Bola Tinubu’s directive on Crude Oil and Refined products sales in the Naira Initiative, which was approved by the Federal Executive Council (FEC).
“We have made tremendous progress in that regard and events have overtaken this development. No party has been served with court processes and there is no intention of doing so.
“We have agreed to put a halt to the proceedings. It is important to stress that no orders have been made and there are no adverse effects on any party.
“We understand that once the matter comes up in January 2025, we will be in a position to formally withdraw the matter in court.”