Oil Marketers Battle Dangote’s Monopoly Bid in Court, Warn of Risks to Nigeria’s Oil Sector and Economy

In a significant legal confrontation, three Nigerian oil marketers—AYM Shafa Limited, A. A. Rano Limited, and Matrix Petroleum Services Limited—are urging the Federal High Court in Abuja to reject a suit filed by Dangote Petroleum Refinery and Petrochemicals, which seeks to limit petroleum importation. The marketers, in their response (case FHC/ABJ/CS/1324/2024), argue that allowing Dangote’s monopoly over Nigeria’s oil sector could severely harm the country’s economy and energy security.

Dangote’s Monopoly Push

Dangote’s lawsuit, originally filed on September 6, 2024, accuses the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Nigeria National Petroleum Corporation Limited (NNPC) of violating Sections 317(8) and (9) of the Petroleum Industry Act (PIA) by issuing import licenses for petroleum products. The refinery argues that import licenses should be granted only when there’s a shortfall in domestic production and seeks a ruling that would limit imports to protect its local refining business.

Marketers’ Defense: Monopoly Threatens Competition and National Security

The marketers, however, insist that Dangote does not yet produce enough petroleum products to meet Nigeria’s daily demand. They argue that restricting imports would create a monopoly, allowing Dangote to control fuel prices and potentially destabilize the nation’s already struggling economy. “Allowing Dangote to monopolize the petroleum sector would cripple competitive pricing and bring untold hardship to Nigerians,” they assert.

The marketers further claim they have fulfilled all legal requirements for their import licenses under Section 317(9) of the PIA, and stress that the licenses were granted in line with the PIA, Federal Competition and Consumer Protection Act, and other relevant laws. They warn that concentrating Nigeria’s energy supply in one refinery is “a recipe for disaster,” as a breakdown in Dangote’s production could throw the country into a critical energy crisis.

Implications for National Fuel Supply

The marketers underscore the risks of depending solely on one producer, noting that without import options, Nigeria’s fuel supply would become dangerously vulnerable. “In the event of any disruption at the refinery, Nigeria would face a severe energy crisis as the country lacks sufficient reserves to cover even a month of fuel consumption,” they caution.

The hearing has been scheduled for January 20, 2025, with the court expecting a report on settlement or further proceedings.

Dangote’s Export Dominance and Output Breakdown

Meanwhile, recent data reveal that Dangote’s 650,000-barrel-per-day refinery has been exporting the majority of its products, largely to foreign buyers. According to a Bloomberg report, international energy giants Vitol Group, Trafigura Group, and BP Plc have purchased about 75% of the refinery’s output since operations began earlier this year. In the local market, only 25% of total fuel production has been retained, highlighting Dangote’s substantial role in reshaping petroleum trade across Africa and Europe.

An analysis of the refinery’s exports between February 27 and October 10 shows it has processed nearly 6 million tons of fuel—equivalent to roughly 45 million barrels. Diesel (automotive gas oil) and fuel oil account for over 60% of the refinery’s output, followed by gasoline for vehicles and jet fuel for aviation.

In October, Dangote reported processing rates of approximately 420,000 barrels per day, aiming to reach full capacity of 650,000 barrels. While this capacity would make it the largest single-site refinery in Africa or Europe, local demand remains underserved, pushing fuel prices higher as exports continue.

The Battle’s Economic Stakes

The marketers argue that granting Dangote a monopoly could unleash further economic hardship, drive up fuel prices, and risk national energy security. They claim that relying on Dangote as the sole producer in the absence of competitive imports would force Nigerians to bear the cost of potentially unchecked pricing.

As the court deliberates, the outcome of this case could reshape Nigeria’s petroleum landscape, with deep implications for local pricing, competition, and energy stability.