Dangote Refinery: NMDPRA Finally Breaks Silence Over Oil Import Licenses to Marketers

• A Federal High Court in Abuja has received an explanation from NMDPRA regarding the justification for oil import licensing
• The country's daily needs for petroleum products cannot be met by the Dangote Refinery's current output levels
• This came after Dangote Refinery sued NMDPRA alongside NNPCL, AYM Shafa Limited, A. A. Rano Limited and others

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has given a Federal High Court in Abuja an explanation of the rationale behind the licensing of oil imports to the nation's oil marketing firms.

Idris Musa, a Senior Regulatory Officer of NMDPRA, provided clarification on the authority's stance in a counter-affidavit to a lawsuit brought by Dangote Petroleum Refinery and Petrochemicals FZE.

According to the application, which was submitted on December 13, 2024, Dangote Refinery's present output levels are insufficient to meet the country's daily requirements for petroleum products.

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“Consequently, and in compliance with Section 317(9) of the Petroleum Industry Act (PIA), the 1st defendant (NMDPRA) issued licenses to import petroleum products to bridge product shortfalls to companies with good track records of international product trading,” Musa said.

In addition to AYM Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited, Dangote Refinery has sued NMDPRA and the Nigeria National Petroleum Corporation Limited (NNPCL).

NMDPRA's response

In its defense, NMDPRA asked the court to dismiss the lawsuit, calling it baseless and without merit. Noting that one of NMDPRA's primary duties is to maintain a thriving petroleum industry that complies with global best standards and ensures national energy security, Musa underlined that Dangote Refinery is not entitled to the reliefs requested.

Musa said that the NMDPRA is dedicated to stopping market abuse, monopoly, and domination by any one party that might take control of the supply chain and affect the lives of more than 200 million Nigerians.

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He added that local refineries have benefited from NMDPRA's assistance in optimizing their ability to serve the country's energy security.

Why import licences were granted

Musa emphasized the uncertainty surrounding Dangote Refinery's capacity to meet the overall nation's petroleum product needs in the short and long term, even as NMDPRA continues to monitor the situation to ascertain when locally refined goods will meet national demand.

Additionally, Musa denied that the NMDPRA's demand for a 0.5% tax on petroleum product sales was unreasonable. He clarified that wholesale customers, not producers, are subject to the fee as outlined in Sections 47(2)(c) and 52(7) of the PIA.

He explained that Dangote Refinery still has to abide by these rules as a free zone entity.

The official further refuted the plaintiff's assertion that the Dangote Industries Free Zone Regulation 2020 exempts its refinery from paying taxes, levies, and rates.

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He underlined that while Dangote Refinery is permitted to sell its goods abroad, it also has an obligation to satisfy domestic demand, which is why NMDPRA grants import licenses to eligible organizations.

Musa reaffirmed that NMDPRA's job is to license businesses that can cover any supply shortages because Dangote Refinery is currently unable to meet Nigeria's whole demand for refined petroleum products.

He maintained that to avoid hardship and guarantee adequate product availability, licenses must be granted to the participating enterprises.

He said there was no evidence to corroborate any allegations of a "grand conspiracy" against Dangote Refinery.

Petrol cost rises again

Legit.ng reported that the price of petrol in Nigeria has gone up to between N1,050 and N1,150 per litre, depending on the area.

The hike comes after several depot owners and the Dangote Petroleum Refinery raised prices.

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BusinessDay reported that because crude oil, the primary ingredient in gasoline manufacturing, is becoming increasingly expensive, dealers predict that petrol prices will continue to rise.

Source: Legit.ng