In a series of filings at the Federal High Court in Abuja, the managing director of a prominent oil company has cautioned that granting Dangote Refinery the monopoly it seeks would result in catastrophic consequences, leading to significant hardship for the populace. Ali Abiodun, the acting managing director of AYM Shafa Limited, made this assertion in a counter-affidavit responding to Dangote Refinery’s lawsuit, which aims to annul the importation licenses of various oil firms.
The $20 billion privately-owned refinery previously petitioned the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), requesting the court to compel the regulator to revoke import licenses issued to the NNPC, Matrix Petroleum Services Limited, A.A. Rano Limited, AYM Shafa, and 2015 Petroleum Limited, citing anti-competitive practices as the basis for their claim.
In a statement included with a sworn affidavit, Abiodun expressed grave concerns regarding the potential ramifications if the refinery’s demands are met. He stated, “Granting the Plaintiff monopoly power in Nigeria’s petroleum sector, as sought in this lawsuit, would undermine competitive pricing of petroleum products, exacerbate Nigeria’s already struggling economy, and inflict severe hardship on its citizens—all of which would create a disastrous situation for the nation.”
Abiodun further elaborated that the cessation of importation would result in a critical shortage of petroleum products, severely impacting Nigeria’s economy and causing considerable distress for its citizens. The attorney representing the defendants also contended that acceding to Dangote’s request would contravene Nigeria’s international commitments under the World Trade Organization, its protocols, and other global treaties.
The main case is set to be heard in January 2025.
This development arises from Dangote’s ongoing conflicts with regulatory bodies regarding the pricing of petrol refined at its facility, as well as its efforts to secure the loyalty of oil marketers.
Last month, Aliko Dangote, the CEO of Dangote Refinery, asserted that the plant was processing approximately 420,000 barrels of crude oil each day and had over 500 million liters of petroleum ready for sale. However, these assertions have been contested by industry stakeholders, including the oil marketers’ association.
Dangote’s History of ‘Unfair’ Business Practices
In a detailed 74-page court filing, Abiodun highlighted what he characterized as Dangote’s unfair business practices, providing an instance where purchasers are mandated to deposit more than 110% in Letters of Credit.
“The plaintiff has instituted a burdensome trade practice, necessitating buyers to deposit 110% in Letters of Credit (LC) corresponding to the quantity they intend to purchase, with the actual pricing disclosed five days post the LC date—after the product has already been dispatched from the plaintiff’s refinery.”
Mr. Abiodun, whose company was among the initial clients of Dangote’s refinery upon its opening in April, also questioned the refinery’s asserted production capacity. He contended that there is a lack of credible, verifiable forensic evidence to substantiate the claim that the refinery can produce 35 million liters of Automotive Gas Oil (AGO) and 9 million liters of Jet A-1 products daily.
“The 4th Defendant was one of the first off-takers of Automotive Gas Oil (AGO) from the Plaintiff’s refinery, loading its initial 20,000 MT in April 2024, and has since acquired and loaded additional shipments totaling approximately 190,000,000 liters—an achievement that would render the 4th Defendant a valued customer for any international refinery or supplier.”
Despite this considerable patronage, Abiodun stated that Dangote continues to impose numerous barriers on the firm’s transactions, complicating the process of purchasing products from the refinery.
Other Major Oil-Exporting Countries also Import Fuel
Court documents reveal that numerous oil-producing countries, which possess significantly greater production and refining capabilities than Dangote, still engage in the importation of petroleum.
For example, the United States imported 8.51 million barrels per day (b/d) of refined petroleum products from 86 different nations in 2023, as reported by the U.S. Energy Information Administration.
Another notable case is Saudi Arabia, which, despite being among the largest oil producers globally with a daily refining capacity of 2.9 million b/d, also imports and stores refined petroleum products to bolster its energy security.
“Saudi Arabia, operating five refineries with a refining capacity of 2.9 million b/d, continues to import and stockpile refined products as part of its energy security strategy,” Abiodun noted.
Likewise, other prominent oil-producing nations, including the UAE, Bahrain, Qatar, and Oman, also import and store petroleum products to enhance their energy security.
Abiodun concluded by asserting that permitting Dangote Refinery to become the exclusive supplier of refined petroleum products in Nigeria would result in a monopoly within the petroleum sector, which is vital for Nigeria’s economy and energy security.
“No nation has achieved or will achieve development by fostering monopolies in any of its essential economic sectors,” he stressed.
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