Court Documents expose Dangote’s attempt to ‘Monopolize’ Petroleum Industry

2 weeks ago 11

Granting Dangote Refinery the monopoly it seeks would be a recipe for disaster, unleashing severe hardship on citizens, a major oil firm’s managing director has warned in a series of filing at the Federal High Court in Abuja.

Ali Abiodun, the acting managing director of AYM Shafa Limited, issued this statement in a counter-affidavit to Dangote Refinery’s lawsuit, which seeks to revoke the importation licenses of several oil companies.

The $20 billion privately-run refinery previously sued the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), asking the court to mandate the regulator to withdraw import licenses granted to the NNPC, Matrix Petroleum Services Limited, A.A. Rano Limited, AYM Shafa, Matrix Petroleum Service Limited, and 2015 Petroleum Limited on the grounds of anti-competitive practices.

However, in a statement attached to a sworn affidavit, Abiodun warned of the potential disaster if the refinery’s request is granted.

“Vesting the Plaintiff with the power of monopoly in Nigeria’s petroleum industry as it seeks in this suit will kill competitive pricing of petroleum products, further deteriorate Nigeria’s critically ailing economy, and impose untold hardship on Nigerians—all of which constitute a recipe for disaster in the polity,” he stated in the 74-page document, exclusively obtained by Politics Nigeria.

Abiodun further explained that eliminating importation would lead to a severe shortfall in the supply of petroleum products, which would severely damage Nigeria’s economy and cause significant hardship for Nigerians.

The defendants’ lawyer also argued that granting Dangote’s request would violate Nigeria’s international obligations under the World Trade Organization, its protocols, and other international treaties.

The substantive case is scheduled to be heard in January 2025.

This development follows Dangote’s ongoing disputes with regulators over the pricing of the petrol refined at its plant and its push to secure oil marketers’ patronage.

Last month, Dangote Refinery CEO Aliko Dangote claimed that the plant was processing around 420,000 barrels of crude daily and had over 500 million liters of petroleum available for sale. Both claims have been challenged by industry stakeholders, including the association of oil marketers.

Dangote’s Record of ‘Unfair’ Business Practices

In his 74-page court document, Abiodun also exposed what he described as Dangote’s unfair business practices, citing one example where buyers are required to deposit over 110% in Letters of Credit.

“The plaintiff introduced an oppressive trade practice, requiring buyers to deposit 110% in Letters of Credit (LC) of the quantity they wish to off-take, with the actual price communicated five days after the LC date—after the product has already been loaded from the plaintiff’s refinery.”

Mr. Abiodun, whose firm was among Dangote’s first customers when it opened in April, also challenged the refinery’s claimed production capacity.

He argued that there is no credible, verifiable forensic evidence to show that the refinery can produce 35 million liters of Automotive Gas Oil (AGO) and 9 million liters of Jet A-1 products daily.

“The 4th Defendant was among the first off-takers of Automotive Gas Oil (AGO) from the Plaintiff’s refinery, loading its first 20,000 MT in April 2024, and has since purchased and loaded additional cargoes totaling about 190,000,000 liters—a feat that would make the 4th Defendant a valued customer for any foreign refinery or supplier.”

Despite this significant patronage, Abiodun said Dangote imposes repeated obstacles on the firm’s transactions, making it challenging to purchase products from the refinery.

Oil-Exporting Countries Still Import Fuel

Documents presented to the court also show that many oil-producing nations with far larger production and refining capacities than Dangote continue to import petroleum.

The United States, for instance, imported 8.51 million barrels per day (b/d) of refined petroleum products from 86 countries in 2023, according to the U.S. Energy Information Administration.

Another example is Saudi Arabia, which, despite being one of the world’s largest oil producers with a total daily refining capacity of 2.9 million b/d, also imports and stores refined petroleum products to ensure energy security.

“Saudi Arabia, with five refineries and a refining capacity of 2.9 million b/d, still imports and stores refined products as part of its energy security strategy,” Abiodun pointed out.

Similarly, other major oil-producing countries—including the UAE, Bahrain, Qatar, and Oman—also import and store petroleum products for energy security.

Abiodun concluded by arguing that allowing Dangote Refinery to be the sole supplier of refined petroleum products in Nigeria would make it a monopolist in the petroleum sector, a critical industry for Nigeria’s economy and energy security.

“No country in the world has developed or will ever develop by encouraging monopoly in any of its key economic sectors,” he emphasized.

POLITICS NIGERIA earlier published an investigative report on Dangote’s brazen attempt to deceive Nigerian Lawmakers over the quality of AGO produced in his refinery as he battled the NMDPRA over its refusal to withdraw import licenses. The report led to the dissolution of the House Committee on Downstream Petroleum led by Hon. Ikenga Ugochinyere.