Battle for the soul of Ngeria’s oil sector by Kazeem Akintunde
There is an ongoing war for the soul of Nigeria’s oil sector. The war is not for the faint hearted. It is one war that has the potential to either make or mar Nigeria’s progress towards becoming a self-reliant country, as well as the energy hub of Africa, and even the world. It is a war between Aliko Dangote, Chairman of Dangote Refinery and Petrochemical Company and other players in the oil and gas sector.
In Nigeria, Dangote is not a small fry that can be tossed around by anybody. However, since the completion of his $20 billion refinery, he has had to engage in one of the toughest battles in his 67 years on earth.
In fact, he alluded to this when he said recently that he would not have dabbled into the oil and gas sector if he had the fore knowledge that the cabal in the industry are so powerful. For a man who has been in business of over four decades and was once the richest man in Africa, I doubt if Aliko wouldn’t have done his home work well before dabbling into the sector.
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In the part of the world where I came from, there is an adage that loosely translates into: “you can’t jump into the water and complain of its coldness”. Dangote has already dabbled into the oil and gas sector and he must fight to survive, unless the federal government takes up his offer to buy his refinery from him and run it. The alternative would be for him to wind down the business and lick his wounds in private. Aliko has chosen to fight, and he is fighting on all fronts.
His latest fight was the court case he instituted against those who are still bent on importing refined petroleum into the country despite the fact that his refinery has the capacity to take care of local markets without further recourse to fuel importation. His 650,000 barrels capacity per day refinery can produce enough refined fuel for local consumption but most of the marketers are not looking in his direction and still prefer to import petrol into Nigeria. For this, he has filed a suit against the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), for issuing import licenses to the marketers and the Nigeria National Petroleum Company (NNPC) Ltd.
Dangote is claiming that continued importation of petrol into the country undermines the operations of the Dangote Refinery, and therefore, he is seeking significant damages. According to Aliko, NMDPRA acted in breach of Sections 317(8) and (9) of the Petroleum Industry Act (PIA), by issuing licenses for the importation of petroleum products to the defendants. Dangote told the court that the licences were issued to the defendants, “despite the production of AGO and Jet-A1 that exceeds the current daily consumption of petroleum products in Nigeria by Dangote Refinery”. The company is therefore, praying the court to award N100billion in damages against the NMDPRA for allegedly continuing to issue import licenses to NNPC Ltd. and the other defendants for the import of petroleum products, such as Automotive Gas Oil (AGO), and jet fuel (aviation turbine fuel) into Nigeria.
Specifically, Dangote Refinery, among other things, has applied for an order of injunction restraining the 1st defendant (NMDPRA) from further issuing and/or renewing import licenses to the 2nd to 7th defendants or other companies for the purpose of importing petroleum products. It further sought an order of the court directing the 1st defendant to seal off all tank farms, storage facilities, warehouses and stations used by the defendants for the storage of all refined petroleum products imported into Nigeria.
However, three of the major oil marketers have asked the Federal High Court in Abuja to stop what they described as a plot by Dangote Petroleum Refinery and Petrochemicals FZE, to monopolise the energy sector of the economy. The marketers, including AYM Shafa Limited, A. A. Rano Limited and Matrix Petroleum Services Limited, maintained that allowing Dangote Refinery to take over the oil sector would spell doom for the country.
The companies took the position in a reply they filed to challenge the competence of the suit Dangote’s firm filed to nullify licenses they secured to import refined petroleum products into the country.
In their reply to the suit, dated November 5, 2024, the three marketers told the court that the plaintiff does not produce adequate petroleum products for the daily consumption of Nigerians, saying there was nothing before the court to prove the contrary. The defendants also told the court that they were well qualified and entitled to be issued with licences by the 1st defendant to import petroleum products into the country within the provisions of Section 317(9) of the PIA.
They argued that vesting the plaintiff with the power of monopoly in Nigeria’s petroleum industry as it was seeking through the legal action would kill competitive pricing of petroleum products in the country, further deteriorate Nigeria’s critically ailing economy, and unleash untold hardship on Nigerians, all of which constitute a recipe for disaster in the polity.
With the court case still ongoing, both parties sought the sympathy and understanding of Nigerians when the marketers told the world that it is cheaper to import fuel into Nigeria than buying from Dangote Refinery. That statement forced Dangote to finally announce that it sells its petrol at N990/per litre and that any fuel sold below that amount is a substandard product, putting to rest, one of the most contentious debates amongst stakeholders since his refinery began operations. Dangote went further to lambast NMDPRA for lacking the necessary tools to carry out its mandate, claiming that the government agency does not have a standard laboratory to access the quality of imported fuel into Nigeria.
It has also accused some of the marketers of planning to establish a blending plant close to his refinery in order to hoodwink Nigerians, and challenged the marketers to be bold enough to establish local refineries in the country rather than resorting to fuel importation.
How the ongoing legal war would pan out is yet to be seen. What is however certain is that Nigerians, as onlookers, have deployed means to manage themselves in the incessant fuel crises. With either Dangote fuel or imported petrol, consumption has dropped significantly as Nigerians have adjusted to the new reality by parking their cars at home. In most towns and cities across the country, many Nigerians now commute either using public transportation, train, or ferry, where it is available, or they deploy the use of their legs to trek. For most, cars are used occasionally on the cost-effective condition that three or four people headed in the same direction at the same time are involved. Most public servants now adopt car-pooling as a strategy, whilst some have been turned into compulsory ‘kabu-kabu’ drivers in order to be able to buy fuel for their cars.
It is a sad reality that fuel that cost N190 per litre when the Tinubu administration came on board now goes for N1,150 in most parts of the country, yet the purchasing power of the masses have not recorded any significant improvement. Even the so-called minimum wage is hardly in effect yet, as most civil servants bemoan it inadequacy to meet the rising cost of living and its late implementation.
More Nigerians have been dragged into the poverty net by the reforms embarked upon by the Tinubu government’s harsh economic policies. Nduka Obaigbena, the publisher of This Day Newspaper, last week, joined the league of Nigerians pleading with the government to ease the suffering on the masses.
Obaigbena, who spoke at the just concluded Nigeria Guild of Editors Conference in Yenagoa, Bayelsa State, suggested that the federal government bring back to life, its four refineries, adding that once they are up and running, it would forestall the need for anyone to import fuel into the country again, and it would encourage healthy competition between government refineries and modular refineries built by private entities which would in turn eventually lead to a fall in price.
I align with Obaigbena’s view. We cannot continue to waste scares forex on the importation of fuel into the country. The federal government, should as a matter of national emergency, fix the existing refineries so that Nigerians can get cheaper fuel. If fuel from our four refineries could be sold at N500 per litre, it would have great impact on the economy as the cost of transporting goods and farm produce from the hinterlands to the city would be greatly reduced. In effect, the prices of foodstuffs would come down and this would be a relief for most traumatized Nigerians. There is nothing bad if other marketers establish modular refineries in the country. This will create jobs, while engendering a competitive spirit.
With that done, another issue begging for attention would be for the government to intensify the battle with bandits and terrorists who have cornered a large portion of Northern Nigeria, killing and kidnapping for ransom while at the same time, preventing farmers from accessing their farmlands for food production. Where they are not charging and forcing farmers to pay ‘protection levy’, they are forcing them to share whatever is harvested from their farms.
We claim that we are not in a Banana Republic, but until we find a lasting solution to the insecurity that has ravaged northern Nigerian for almost 15 years, we are joking with the overall survival of Nigeria as a nation.
As we await the court pronouncement on the legal battle between Dangote Refinery and independent marketers, it is hoped that common sense would prevail, and the interest of Nigeria and Nigerians would be upper most in the minds of the two gladiators in the oil and gas sector.
Nigerians have already been pushed to the wall and they might react in a way that would not be palatable to those in government. Now is the time for President Tinubu to ensure that reason prevails and the oil sector is fully liberalized for all the players to survive and thrive in the country. Dangote should also not think that he can muzzle other stakeholders out of the oil and gas sector and become a monopoly, dictating the price of fuel for Nigerians.
See you next week.
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