- Refinery buckles, claims suit is not fresh, plans withdrawal of the same in January 2025
Indications emerged Tuesday that fuel loading schedule by Dangote Refinery revealed that the facility recorded 748 million litres supply shortfall in its obligation to the NNPCL in the months of September and October, 2024.
The revelation came on a day court documents also surfaced on the on-going lawsuit by Dangote refinery in Abuja to invalidate import licences issued to the Nigerian National Petroleum Company Limited (NNPC Ltd ) and few others,
Though the document sighted did not disclose the reason for the output dip, it showed that Dangote refinery recorded this shortfall, being 30 per cent average for the two months.
Recall that the Dangote Refinery had dragged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) through a Federal High Court in Abuja demanding the revocation of the fuel import licences for the NNPC Ltd and other firms.
In its originating summons dated September 6, 2024, and exclusively seen by Nairametrics, the plaintiff’s lawyer, Ogwu James Onoja, SAN, asked the court to declare that NMDPRA is allegedly in violation of Sections 317(8) and (9) of the Petroleum Industry Act by issuing licenses for the importation of petroleum products.
He stated that such licenses should only be issued in circumstances where there is a petroleum product shortfall.
He also urged the court to declare that NMDPRA is in violation of its statutory responsibilities under the Petroleum Industry Act (PIA) for not encouraging local refineries such as Dangote Refinery.
The loading document from Dangote Refinery, however, showed that while the demand volume by NNPCL stood at 400 million litres in September, Dangote Refinery was only able to supply 103 million Litres. This is a 28 per cent shortfall.
For the month of October, the percentage of shortfall rose to 32 per cent as Dangote Refinery was able to supply only 214 million Litres despite a demand of 665 million litres.
The Court reserves the full autonomy to receive these documents from lawyers and take a decision on the case.
The Case
Dangote Petroleum Refinery and Petrochemicals FZE has asked the Federal High Court in Abuja to void import licenses issued to the Nigeria National Petroleum Corporation Limited (NNPC), Matrix Petroleum Services Limited, A. A. Rano Limited, and four other companies for the purpose of importing refined petroleum products that are already being produced by Dangote without shortfalls.
In suit number FHC/ABJ/CS/1324/2024, Dangote Refinery is also seeking N100 billion in damages against the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for allegedly continuing to issue import licenses to NNPCL, Matrix, and other companies for importing petroleum products such as Automotive Gas Oil (AGO) and Jet Fuel (aviation turbine fuel) into Nigeria, “despite the production of AGO and Jet-A1 that exceeds the current daily consumption of petroleum products in Nigeria by the Dangote Refinery.”
Joined as defendants in the case are NMDPRA, NNPCL, Aym Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited (1st to 7th defendants).
In an affidavit deposed by Ahmed Hashem, the Group General Manager of Government and Strategic Relations at Dangote Refinery, he submitted that the import licenses granted to other companies by NMDPRA for the importation of AGO and Jet-A1 are crippling the plaintiff’s business, to which it has committed substantial financial resources in billions of US dollars.
He noted that the plaintiff’s products were largely left unpatronized due to the alleged actions of NMDPRA.
He stated that NMDPRA had threatened to impose and demand a 0.5% levy on the plaintiff on wholesales and off-takers, as well as another 0.5% levy on wholesales to the Midstream and Downstream Gas Infrastructure Fund (MDGIF) via a letter dated June 10, 2024, contrary to statutory provisions that limit the implementation of levies on transactions within Free Zones.
He emphasized that the foundational purpose of establishing Free Zones was to foster competition, attract foreign investment, and create tax havens.
He further stated that there was an alleged grand conspiracy and concerted effort by International Oil Companies and interests, in conjunction with the defendants, who were unhappy that Nigeria had an indigenous refinery ready to solve the lingering energy crisis and save the economy.
“The intervention of the Honourable Court has become necessary in order to stem the incessant violation of statutory provisions by the 1st Defendant in favor of other entities such as the 2nd to 7th defendants,” the plaintiff stated.
The refinery’s legal team stated that the plaintiff is greatly distressed, and its investments risk being jeopardized unless the Honourable Court intervenes.
He sought an order of injunction restraining the 1st Defendant from further issuing and/or renewing import licenses to the 2nd to 7th defendants or other companies for the purpose of importing petroleum products.
In addition to a restraining order against the import licenses of the affected companies, the plaintiff sought “General damages in the sum of N100,000,000,000 against the 1st Defendant (NMDPRA) and an order of 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.”
Other reliefs partly sought by the plaintiff are as follows:
A declaration that by the provisions of Section 8(1) of the Nigerian Export Processing Zone Act (NEPZA), Sections 23(h) and 55(1) of the Companies Income Tax Act (CIT Act), Paragraph 6 of the Second Schedule to the CIT Act, Regulation 54(2)(a)(i) of the Dangote Industries Free Zone Regulation 2020, and the Finance Act, the plaintiff, being an entity duly registered as a Free-Zone Enterprise, is exempted from all federal, state, and local government taxes, levies, and other rates.
A declaration that it is against the NEPZA Act, CIT Act, Finance Act, and Dangote Industries Free Zone Regulation 2020, as well as legislative intent, for the 1st Defendant to impose or threaten to impose on the plaintiff an additional financial obligation of a 0.5% levy meant for off-takers of petroleum products directly and an additional 0.5% wholesale levy in favor of the Midstream Downstream Gas Infrastructure Fund (MDGIF).
An order of mandatory injunction directing the 1st Defendant to withdraw immediately all import licenses issued to the 2nd-7th defendants and other companies other than the plaintiff and other local refineries for the purpose of importing refined petroleum products into Nigeria.
An order of injunction restraining the 1st Defendant from imposing and demanding a 0.5% levy meant for off-takers of petroleum products directly and an additional 0.5% wholesale levy in favor of MDGIF or any other levy or sum against the plaintiff.
What Transpired in Court
At the resumed sitting before Justice Inyang Ekwo, George Ibrahim SAN, counsel for the plaintiff, informed the judge that there is a development in the case as the parties are trying to settle.
