The Nigerian National Petroleum Company Limited (NNPCL) is still actively importing premium motor spirit (PMS) and automotive gas oil (AGO), known as petrol and diesel, despite significant output from the newly operational Dangote Refinery. Between October 1 and November 11, 2024, the NNPCL facilitated the importation of over 1.8 million metric tonnes of these fuels through multiple petroleum marketers, with Pinnacle Oil being a key participant.

Dangote Refinery, with a reported capacity to meet Nigeria’s daily demand for AGO and jet fuel (Jet-A1), has pushed back against this importation practice. The refinery argues that NNPCL’s ongoing issuance of import licenses disrupts the supply chain, creating an oversaturated market that undercuts Dangote’s prices and operations. Dangote Petroleum Refinery has taken legal action, requesting that the Federal High Court revoke the import licenses granted to NNPCL and companies like Matrix Petroleum Services Limited.

One insider suggested to SaharaReporters that these imports continue to support a “monthly $200 million racket.” This source indicated that off-spec, blended, and substandard fuel is being imported at lower prices than Dangote’s products. Furthermore, they alleged that NNPCL manipulates quality checks by controlling the certification process, thus enabling substandard imports to enter the market at competitive rates.

Marketers Defend Imports in Court

In response to Dangote’s legal action, petroleum marketers defended the necessity of imports, arguing that Nigeria’s demand cannot be solely met by the Dangote Refinery. AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited have cited instances of delays at the Dangote Refinery, where trucks reportedly wait for extended periods to load products, suggesting insufficient supply for Nigeria’s needs. They highlighted that the time to import products from offshore sources is often faster than awaiting Dangote’s output, leading to delays in the country’s fuel supply chain.

They further argued that the practice of importing fuels from international sources aligns with industry standards seen in major oil-producing countries, which continue to import fuels despite robust production capacities. The marketers emphasized that Dangote’s suit, if granted, would monopolize Nigeria’s energy sector, eliminate competitive pricing, and create challenges for a stable energy economy.

Dangote Refinery’s Case for Monopoly-Free Sector

The Dangote Refinery, positioned as Africa’s largest refinery with a daily production capacity of 650,000 barrels, was designed to address Nigeria’s heavy reliance on imported fuels and boost employment. However, according to court filings, marketers have criticized the refinery’s purchasing policies. They claim Dangote’s requirement for buyers to deposit 110% of the purchase amount via Letters of Credit (LC), combined with variable pricing set only days after loading, introduces an unfair business environment.

In its legal case, Dangote’s refinery urged the court to reinforce Section 317 of the Petroleum Industry Act, which restricts import licenses solely to situations where domestic production fails to meet demand. This regulation, the refinery argues, is critical to sustaining the market for locally refined products and reducing Nigeria’s dependence on foreign fuels.

The Implications for Nigeria’s Energy Market

The debate over imports versus local production has polarized stakeholders in Nigeria’s energy sector. Marketers warn that withdrawing their import licenses would harm their businesses, cause widespread job losses among their largely Nigerian workforce, and destabilize fuel prices, potentially creating economic strain for Nigerians. They argue that these competitive imports have become essential to prevent monopolistic control by Dangote’s refinery and ensure stable supply and pricing.

This ongoing legal battle highlights the tension between fostering local refinery growth and the economic necessity of fuel imports. The outcome of this case will likely have far-reaching consequences for Nigeria’s fuel economy, energy security, and the livelihoods of those within the sector.