The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has defended its decision to issue oil import licenses to other companies alongside the Nigerian National Petroleum Company (NNPC), despite the recent commissioning of the Dangote Refinery.

In a counter-affidavit filed in response to a lawsuit by Dangote Refinery, NMDPRA stated that current domestic production from the refinery is insufficient to meet Nigeria's daily petroleum product needs.

"Consequently, and in compliance with Section 317 [9] of the PIA (Petroleum Industry Act), the 1st defendant (NMDPRA) issued licences to import petroleum products to bridge product shortfalls to companies with good track records of international products trading," stated Idris Musa, a senior regulatory officer at NMDPRA.

The lawsuit, filed by Dangote Refinery against NMDPRA and NNPC, sought to nullify import licenses granted to several other oil companies, arguing that NMDPRA violated the Petroleum Industry Act by issuing such licenses.

NMDPRA, however, emphasized the need for multiple supply sources to ensure energy security and prevent potential monopolies. The agency highlighted that it closely monitors oil production levels and will adjust import licenses accordingly as domestic production increases.

"The present market structure of local refining would result in a monopoly with its pricing implications and put the nation’s energy security at risk," Musa stated.

Furthermore, NMDPRA defended a 0.5% levy imposed on petroleum products, stating that it is justified under the PIA and necessary to fund regulatory activities. The agency also clarified that this levy is applicable to customers, not producers.

The lawsuit has sparked debate about the role of the Dangote Refinery in Nigeria's petroleum market. While the refinery is expected to significantly boost domestic production, concerns remain about its current capacity to meet the nation's entire demand.

NMDPRA maintains that the issuance of import licenses is crucial to maintain adequate supply and prevent potential disruptions in the market. The outcome of this legal battle will have significant implications for the Nigerian oil and gas sector, particularly regarding the balance between domestic production and imports.

The Case

The ongoing lawsuit filed by Dangote Refinery against the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) challenges NMDPRA's decision to grant import licenses to NNPC and other oil marketers, including AYM Shafa Limited, A.A. Rano Limited, and Matrix Petroleum Services Limited.

Dangote Refinery contends that these licenses were issued unlawfully, as they violate Sections 317(8) and (9) of the Petroleum Industry Act (PIA). The company argues that such licenses can only be granted when there is a demonstrable shortfall in domestic petroleum supply.

Represented by Senior Advocate of Nigeria (SAN) Ogwu Onoja, the refinery seeks a court declaration nullifying these import licenses and seeks ?100 billion in damages from NMDPRA for alleged breaches of the law.