Dangote faces price war as NNPC backs fuel imports

The Nigerian National Petroleum Company Limited has told the Federal High Court sitting in Lagos that petroleum products from the Dangote Petroleum Refinery and Petrochemicals FZE are sold at “significantly high and fluctuating market prices”, warning that granting the refinery’s requests could hand it monopoly control of Nigeria’s downstream petroleum sector.

The national oil company stated this in a counter-affidavit in opposition to Dangote refinery’s originating summons in Suit No: FHC/L/CS/857/2026 before the Federal High Court, Lagos Judicial Division.

Similarly, marketers under the aegis of the Petroleum Products Retail Outlet Owners Association of Nigeria supported the NNPC, saying competition must be allowed in the petroleum sector to prevent what it called price exploitation, saying multiple sources privy would bring about a reduction in fuel prices.

In the counter-affidavit, a copy of which was obtained by our correspondent, the NNPC asked the court to dismiss or strike out the suit on grounds that it was incompetent, premature, disclosed no cause of action, and constituted an abuse of court process.

The PUNCH reports that the Dangote refinery had challenged the issuance of petrol import licences to marketers and the Nigerian National Petroleum Company Limited by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

The PUNCH reports that the NMDPRA recently approved licences for the importation of over 700,000 metric tonnes of petrol despite claims that the Dangote refinery now supplies more than 90 per cent of the nation’s daily PMS consumption.

The Dangote refinery had dragged the Attorney-General and the NNPC before the court, asking it to void import permits granted by the NMDPRA to fuel importers, arguing that the licences violated existing regulations and an earlier court order to maintain the status quo.

Dangote had accused the NNPC and others of sabotaging the $20bn investment, especially by denying it crude supplies and resorting to fuel importation when it has the capacity to produce what the country needs in terms of petrol, diesel, and others.

Responding, the NNPC said it would raise a preliminary objection challenging the competence of the suit and the refinery’s locus standi. “The plaintiff’s suit is premature; the plaintiff lacks locus standi,” the affidavit said.

The state oil company declared that Dangote refinery’s petroleum products were already expensive and subject to price swings dictated by commercial interests. “The plaintiff’s petroleum products are already sold at significantly high and fluctuating market prices, dictated by its commercial interests,” the company said.

NNPC accused the refinery of forum shopping, saying, ”The institution of multiple actions by the plaintiff in respect of substantially the same subject matter and reliefs constitutes an abuse of court process and amounts to forum shopping.”

The company argued that the Dangote refinery had earlier filed a similar action before the Abuja Judicial Division of the Federal High Court in Suit No. FHC/ABJ/CS/1324/2024 against the NMDPRA and six others over import licences and levies before later withdrawing the case and instituting another action in Lagos.

NNPC maintained that there was no evidence showing the refinery could independently satisfy Nigeria’s petroleum product demand. “There is no credible, independent, or verifiable evidence before this honourable court establishing that the plaintiff presently satisfies the petroleum product demands of Nigeria,” NNPC argued.

The national oil company added that the refinery failed to provide independently verified evidence establishing the country’s actual daily consumption needs or proof of its ability to guarantee an uninterrupted nationwide supply.

“The plaintiff has failed to place before this Honourable Court any comprehensive or independently verified evidence establishing the actual daily national consumption rate of petroleum products in Nigeria or the plaintiff’s ability to guarantee uninterrupted nationwide petroleum supply independently,” it was said.

NNPC also argued that the refinery’s production claims were insufficient to justify restricting imports, stressing, “The plaintiff’s alleged production figures are selective, incomplete, and incapable of establishing nationwide product sufficiency.”

The company stressed that fuel supply obligations go beyond refining capacity alone, as they necessarily involve logistics, strategic storage, product evacuation, distribution, haulage, transportation, and strategic reserve management.

NNPC warned that depending on a single operator for national fuel supply would endanger Nigeria’s energy security. “Reliance on a single supplier within the petroleum industry poses grave risks to national energy security,” it was stated.

The company added that restricting imports in the manner sought by the refinery could trigger severe supply crises nationwide. “Restricting importation channels in the manner sought by the plaintiff would expose Nigeria to severe risks of petroleum shortages, supply disruptions, price instability, distribution failures, and national energy crises,” the affidavit read.

NNPC further told the court that any operational interruption, shutdown, or disruption affecting the Dangote refinery operations in Nigeria would result in severe petroleum shortages if alternative importation and supply channels are eliminated.

The company accused the refinery of attempting to edge out other participants in the downstream supply chain. It warned that granting the refinery’s requests could create monopoly control in the petroleum sector.

“The reliefs sought by the plaintiff are aimed at substantially restricting or eliminating other participants within the petroleum importation and supply chain. The grant of the plaintiff’s reliefs would effectively expose Nigeria’s petroleum sector to monopoly control and undermine competitive participation within the industry,” the affidavit stated.

NNPC warned the court that a monopoly in the sector would hurt consumers and destabilise the economy by distorting market competition, undermining pricing stability, reducing supply flexibility, and exposing the Nigerian economy to “substantial risks”.

The company defended the continued issuance of import licences by regulators, insisting they were lawful and necessary for energy security and market stability, saying this does not contravene Section 317(9) of the Petroleum Industry Act, 2021.

The oil company told the court that Section 317(8) of the PIA merely gave regulators discretionary powers regarding backward integration policy and did not impose a mandatory ban on imports.