Oil marketers challenge Dangote Refinery’s bid for monopoly, citing risks to competition and energy security in Nigeria’s petroleum sector.

[dropcap]T[/dropcap]hree major oil marketers—AYM Shafa Limited, A.A. Rano Limited, and Matrix Petroleum Services Limited—have requested the Federal High Court in Abuja to dismiss a lawsuit brought against them by Dangote Petroleum Refinery and Petrochemicals.

The case, filed by Dangote Refinery, seeks to prevent these companies from importing petroleum products, a move the marketers argue would harm competition and energy security in Nigeria’s oil sector.

Also read: Dangote accused of misleading Tinubu on fuel storage amid monopoly push

In a joint counter-affidavit dated 5 November 2024, the marketers highlighted that granting Dangote Refinery’s request would risk monopolising the oil industry, creating what they called a “recipe for disaster.”

The affidavit, referenced as FHC/ABJ/CS/1324/2024, came in response to an originating summons Dangote Refinery filed on 6 September 2024.

In the suit, Dangote alleges that the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) violated Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licences to various oil firms, including AYM Shafa, A.A. Rano, and Matrix Petroleum.

Dangote Refinery argued that import licences should only be granted when there is a confirmed shortfall in petroleum products and claimed that NMDPRA had neglected its duty to promote local refineries.

The refinery further requested that the court revoke the marketers’ licences, stating that its own production capabilities should be sufficient to meet Nigeria’s needs.

In response, the marketers argued that Dangote Refinery does not yet produce enough fuel to satisfy Nigeria’s daily demand.

They stated that they had met all legal requirements for the licences issued by NMDPRA and were entitled to import petroleum under Section 317(9) of the PIA. Moreover, they contended that restricting importation to favour Dangote’s refinery would disrupt fair pricing and lead to energy insecurity.

“The import licences issued to the defendants align with the Petroleum Industry Act, 2021, as well as the Federal Competition and Consumer Protection Act, 2018,” the marketers insisted.

They also warned that monopolising petroleum production would lead to price hikes and limited availability, potentially plunging Nigeria into an energy crisis if Dangote Refinery faced operational setbacks.

The marketers cited potential risks of relying solely on Dangote, noting that in the event of any breakdown, Nigeria would be left vulnerable due to inadequate reserves to cover a month’s worth of energy needs.

They emphasised that granting Dangote a monopoly would “unleash untold hardship on Nigerians” by increasing costs and reducing competition.

Meanwhile, a Bloomberg report revealed that three foreign companies—Vitol Group, Trafigura Group, and BP Plc—currently purchase around 75% of Dangote’s output, with the rest supplied to Nigeria’s local market.

Since its launch, the refinery has been producing diesel, jet fuel, and petrol, and it has reached processing levels of approximately 420,000 barrels per day.

Analysts say Dangote’s refinery has reduced an oversupply of Nigerian crude, impacting oil trade across Africa and Europe.

With the court case scheduled for further review in January 2025, the dispute raises significant questions about Nigeria’s energy security and market competition.