Dangote Refinery And FCCPC Clash In Court Over Alleged Petrol Monopoly In Nigeria
Dangote Petroleum Refinery and Petrochemicals FZE and the Federal Competition and Consumer Protection Commission (FCCPC) have taken opposing legal positions regarding the former’s N100 billion import license lawsuit and allegations of monopoly in the oil and gas sector.
This is according to counter-affidavits and associated court documents exclusively seen and reviewed by Nairametrics amid the refinery’s suit.
The pending suit, marked FHC/ABJ/CS/1324/2024, seeks to void import licenses issued to some Nigerian oil companies by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
These companies include the Nigerian National Petroleum Company Limited (NNPCL), Matrix Petroleum Services Limited, A.A. Rano Limited, and four others.
Brief facts of the case
In suit number, FHC/ABJ/CS/1324/2024, dated September 2024 and first mentioned at the Federal High Court, Abuja, in October last year, Dangote Refinery is seeking N100 billion in damages against NMDPRA for allegedly continuing to issue import licenses to NNPCL, Matrix, and other companies for importing petroleum products such as Automotive Gas Oil (AGO) and Jet Fuel (aviation turbine fuel) into Nigeria.
The refinery argues that these products are already being produced domestically without shortfalls.
The refinery’s lawyers, Dr. Ogwu James Onoja, SAN, and George Ibrahim, SAN, argued that NMDPRA allegedly violated Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licenses for petroleum products, which should only be granted when there is a proven shortfall in supply.
Days after the suit was filed and adjourned, three oil companies—Matrix Petroleum Services Limited, A.A. Rano Limited, and AYM Shafa Limited—filed a motion urging the court to dismiss the suit.
They argued that only NMDPRA and NNPCL are legally empowered to determine petroleum product shortfalls in Nigeria, not Dangote Refinery.
Meanwhile, NNPCL’s counsel, Ademola Abimbola, SAN, filed a preliminary objection, arguing that the plaintiff erroneously sued “Nigeria National Petroleum Corporation,” a non-existent entity, instead of the correctly registered “Nigerian National Petroleum Company Limited.”
Abimbola also argued that until NMDPRA decides to apply the Backward Integration Policy in the downstream petroleum sector, it is not under any obligation to restrict the issuance of petroleum product import licenses solely to cover shortfalls in local refinery production.
In its counter-affidavit and written address filed last Friday and seen by Nairametrics, George Ibrahim asked the court to dismiss NNPCL’s objection, arguing that a close examination of the originating summons, affidavit, and attached documents clearly shows that the plaintiff’s grievance concerns the “flagrant disobedience of the Petroleum Industry Act (PIA) by a statutory body created to implement the Act.”
Nairametrics reports that the matter is pending before Justice Inyang Ekwo, and the next proceedings have been fixed for February 5, 2025.
Amid the pending case, the FCCPC, on January 5, 2025, filed a motion on notice seeking the court’s leave to join as a “co-defendant” in the refinery’s lawsuit.
What FCCPC and Dangote Refinery Are Saying
- In its motion and accompanying processes exclusively seen by Nairametrics, the FCCPC legal team, led by Barrister Olarenwaju Osinaike, stated that FCCPC is seeking to be joined as a necessary party to the present proceedings because its interest would allegedly be affected by the outcome of the suit.
- The Commission stated that the case involves whether preventing the oil companies in dispute from operating the said licenses would lead to anti-competition or monopoly in favor of Dangote Refinery, among others.
- He submitted that one of the main issues raised in the refinery’s originating summons allegedly “relates to anti-competition and monopoly in the petroleum industry sector.”
- He drew the court’s attention to the functions of the FCCPC, which, according to him, include eliminating anti-competitive agreements, misleading, unfair, deceptive, or unconscionable marketing, trading, and business practices.
“There are grounds from the plaintiff’s case for believing that the plaintiff (Dangote Refinery) is attempting to create a monopoly situation in relation to the production and distribution of petroleum products in Nigeria through the machinery of the court,” the FCCPC stated.
The FCCPC contended that Nigeria operates a free-market economy, allowing individuals and entities to participate in various sectors without hindrance.
He submitted that the FCCPC Act, which established the Commission, obligates it to eliminate anti-competitive agreements and practices that may restrict other participants from engaging in the petroleum product distribution value chain.
“The extant spirit and provisions of the FCCPC Act do not permit monopoly behemoth activities in product manufacturing and distribution, including oil and gas,” the FCCPC stated.
The lawyer highlighted that if the court eventually joined the Commission in the suit, it would seek its outright dismissal.
In its counter to FCCPC’s request to join the suit, seen by Nairametrics, Dangote Refinery responded that:
“It is not true that the plaintiff’s suit is monopolistic but solely aimed at revamping local refining of petroleum products in Nigeria.”
Ibrahim submitted that his client was granted a license by NMDPRA under the Petroleum Industry Act to import, produce, and refine petroleum products.
He maintained that NMDPRA should only grant import licenses in line with Section 317(8) and (9) of the Petroleum Act, which permits the import of refined products only when there is a shortage in local production.
“Dangote Refinery is able to meet the daily consumption demand of the country,” he stated, adding that NMDPRA allegedly granted licenses to the defendants to import petroleum products contrary to Section 317(8) and (9) of the Petroleum Industry Act.
“The Petroleum Industry Act does not give the Federal Competition and Consumer Protection Commission (FCCPC) authority to issue licenses or impose levies on the plaintiff,” he continued, describing the FCCPC as a “meddlesome interloper” that should not be allowed to join the suit.
He further submitted that FCCPC has no business in a case revolving around the PIA—an Act of the National Assembly .
He stated that FCCPC should instead seek an amendment to the law if it has any grievance regarding the petroleum sector.
Nairametrics gathered that the court will make a pronouncement on FCCPC’s application amid the proceedings.
What You Should Know
- Africa’s richest man, Aliko Dangote had announced his willingness to sell his multibillion-dollar refinery to NNPCL, amid escalating disputes with regulators and equity partners, last year.
- Dangote had previously accused other importers of bringing substandard petroleum products into Nigeria.
- Nairametrics reported that the federal government later allowed marketers to purchase petroleum products directly from Dangote Refinery, following NNPCL’s decision to withdraw as an intermediary between the refinery and marketers.
