WorldStage Newsonline– Major stakeholders in the Nigeria’s oil and gas sector are bracing up for what could be a protracted legal battle over the supply and sales of petroleum products following a lawsuit filed on September 6, 2024 by Dangote Petroleum Refinery and Petrochemicals against the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for allegedly continuing to issue import licenses to NNPCL and other importers.
The relief being sought by Aliko Dangote who has invested over $20 billion to put a refinery in place that could meet the nation’s petroleum products needs is that the NMDPRA had violated sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licenses under circumstances where no product shortfall exists.
Specifically, Dangote Refinery sued NMDPRA and NNPCL as 1st and 2nd defendants and listed as 3rd to 7th defendants respectively in the originating summons as AYM Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited.
The company prayed the court to declare that NMDPRA was in violation of Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing licenses for the importation of petroleum products.
It stated that such licenses should only be issued in circumstances where there is a petroleum product shortfall.
It also urged the court to declare that NMDPRA is in violation of its statutory responsibilities under the PIA for not encouraging local refineries such as the company.
With the Dangote suit number FHC/ABJ/CS/1324/2024 which is demanding for N100 billion damages from NMDPRA catching most industry players unaware, some legal experts have expressed no surprise that the richest man in Africa is several steps ahead of his competitors in preparing grounds to protect his investment.
Fitch Ratings had in early August this year downgraded Dangote Industries Limited’s (DIL) credit rating to B+ and put it on ratings watch negative, citing concerns about its liquidity and ability to raise money.
According to Fitch, “The downgrade reflects significant deterioration in the group’s liquidity position,” adding that the group had underperformed its operational and financial expectations and was also hit by devaluations to the naira currency.
While Fitch said it was not expecting a positive rating action until the company’s liquidity position improves substantially, analysts believed that the group may run into serious financial crisis if it cannot get its 650,000 barrel per day refinery in Nigeria fully operational as soon as possible.
Inside sources confided that Dangote’s legal approach to the issue despite President Bola Tinubu’s intervention through a directive on crude oil and refined products sales in Naira initiative, which was approved by the Federal Executive Council (FEC), was based on his understanding of Nigeria’s system where government officials can disregard existing regulations and pursue selfish agenda that could destroy an entire industry.
They sited examples in the past when a CBN governor unilaterally sacked a number of banks’ MDs which led to the collapse of their banks, while another CBN governor recently pursued a naira re-denomination policy that nearly grounded the economy.
While Dangote had publicly played down its legal pursuit, claiming that events had overtaken the development and it may likely withdraw it when it comes up in January 2025, inside sources said the opposite is the case behind the scene as the industry giant is not leaving anything to chance, knowing that as government four refineries had failed with no one held accountable, if he fails to fight for his right, his business and wealth will become history.
While Mr Anthony Chiejina, spokesperson for Dangote Group in a recent statement acknowledged that the suit filed as recent as September 6, 2024 was an old issue that started in June, that “no party has been served with court processes and there is not intention of doing so”, latest development had shown otherwise.
In fact, the concerned three oil marketers- AYM Shafa Limited, A. A. Rano Limited and Matrix Petroleum Services Limited, this week prayed the Federal High Court in Abuja to dismiss the suit filed by Dangote Petroleum Refinery and Petrochemicals challenging the issuing of licenses for the importation of petroleum products.
The oil marketers, in a joint counter affidavit marked: FHC/ABJ/CS/1324/2024 filed in response to Dangote Refinery’s originating summons, told Justice Inyang Ekwo that granting that application would spell doom for the country’s oil sector.
According to them, the plan to monopolise the oil sector is a recipe for disaster in the country.
The three marketers said the plaintiff did not produce adequate petroleum products for the daily consumption of Nigerians.
Besides, they argued that there was nothing placed before the court to prove the contrary.
The marketers, in their response filed on Nov. 5, told the court that they are well qualified and entitled to be issued import licence by NMDPRA to import petroleum products in Nigeria within the meaning of Section 317(9) of the PIA.
They argued that vesting Dangote Refinery with the power of monopoly in Nigeria’s petroleum industry as it sought vide the instant suit, would kill competitive pricing of petroleum products in the country.
They said that such act would further deteriorate the country’s critically ailing economy “and unleash untold hardship on Nigerians, all of which constitute a recipe for disaster in the polity. “
They said if Nigeria puts all her energy eggs in one basket by stopping importation of petroleum products and allowing the plaintiff to be the sole producer and supplier of petroleum products in Nigeria, with liberty to determine the prices at which it supplies the products, the prices of petroleum products will continue to rise and energy security will elude Nigeria
“That in the event of any breakdown in or obstruction to the production chain of the plaintiff which stops it from producing, Nigeria will be thrown into energy crises because it does not have the reserves that would last it for at least 30 days that it would need to order, pay for, freight and import refined products into tanks in Nigeria.
“That amidst the glaring absence of any credible and demonstrable proof that the plaintiff refines and supplies adequate petroleum products for the daily use/consumption of Nigerians, is a recipe for disaster in Nigeria’s energy sector.”
They further told the court that granting the reliefs sought by the plaintiff was a design to leave Nigeria and Nigerians at the mercy of the plaintiff with respect to availability and cost of purchasing petroleum products in the country.
They equally argued in their reply that they are fully qualified for the issuance of the import licences issued to them by the 1st defendant, as they duly met all the legal requirements for the issuance of such import licences, before same were issued to them.
“The import licences lawfully and validly issued to the defendants did not in any way whatsoever, cripple the plaintiff’s business or its refinery,” they told the court..
“The import licences issued to the defendants by the 1st defendant are in line with the provisions of Petroleum Industry Act, 2021, the Federal Competition and Consumer Protection Act, 2018 and other relevant laws.”
The response of the oil marketers to the Dangote suit according to industry sources is an indication that a possible out of court settlement is still not on the table.
However, Justice Ekwo had fixed Jan. 20, 2025 for report of settlement or service.
