…NMDPRA justifies issuance
The Nigeria Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, has told a Federal High Court in Abuja why it issued oil import licences to oil marketing companies in the country.
NMDPRA told Justice Inyang Ekwo in a counter affidavit its filed and deposed to by Idris Musa, a Senior Regulatory Officer in the office, against a suit filed by Dangote Petroleum Refinery and Petrochemicals FZE.
The regulatory authority, in the application dated and filed December 13, 2024, said the current production of Dangote Refinery, the plaintiff in the suit, is yet to meet the national daily petroleum products sufficiency requirement.
“Consequently, and in compliance with Section 317 [9] of the PIA (Petroleum Industry Act), the 1st defendant (NMDPRA) issued licences to import petroleum products to bridge product shortfalls to companies with good track records of international products trading,” Mr. Musa said.
The News Agency of Nigeria reports that Dangote Refinery had sued NMDPRA and Nigeria National Petroleum Company Limited, NNPC, as 1st and 2nd defendants.
Also joined as 3rd to 7th defendants respectively in the originating summons, marked: FHC/ABJ/CS/1324/2024 and dated Sept. 6, are AYM Shafa Limited, A. A. Rano Limited, T. Time Petroleum Limited, 2015 Petroleum Limited, and Matrix Petroleum Services Limited.
The oil company, through its lawyer, Ogwu Onoja, SAN, prayed the court to nullify import licences issued by NMDPRA to the NNPCL and the five other companies for the purpose of importing refined petroleum products.
The company (plaintiff) also prayed the court to declare that NMDPRA was in violation of Sections 317(8) and (9) of the Petroleum Industry Act, PIA, by issuing licenses for the importation of petroleum products.
It stated that such licenses should only be issued in circumstances where there is a petroleum product shortfall.
It equally sought a N100 billion in damages against NMDPRA for allegedly continuing to issue import licences to NNPC and the five companies for importing petroleum products, among other reliefs.
But the NMDPRA, through its officer, prayed the court to dismiss the suit as it is misconceived, unmeritorious and incompetent.
Mr Musa argued that Dangote Refinery is not entitled to any of the reliefs sought.
He said the key functions of NMDPRA is to ensure a vibrant petroleum sector which will be operated in line with international best practice.
He said it also ensures national energy security through continuity of supply and the prevention of abuse of the market by any individual or group, dominance and unhealthy monopoly, wherein a single company or entity will control the supply chain and determine the fate of over 200 million Nigerians.
He said in furtherance of the above objectives, the regulatory agency had supported and continued to support all local refineries to enable their optimum capacity utilisation while ensuring that national energy security is maintained.
According to him, as at 18th Jully, 2024, there are four functional licenced modular refineries.
“There are also four other refineries owned by the Nigerian National Petroleum Company Limited (NNPC) which are currently at different stages of maintenance.
“At the second quarter of 2024, the plaintiff and the four functional licensed modular refineries produced Automative Gas Oil (AGO) and Aviation Turbine Kerosene (ATK) in considerable volumes,” he said.
Mr. Musa, however, added that NMDPRA was closely monitoring the development to ascertain when the locally refined output would meet the country’s daily petroleum products sufficiency.
Besides, he said the agency is also mandated to promote competition and prevent abuse of dominant market positions and unhealthy monopoly in the oil and gas sector.
“The Import volume to be allocated between participants (that is licensed importers) by the 1st defendant is based on the criteria to be setout taking into account the respective refining output in the preceding quarter of the year, the share of active wholesale customers, competitive pricing and prudent supply, storage and distribution track records.”
The official said there had been palpable uncertainties and instability regarding activities and capacity of the Dangote Refinery to solely cater for the petroleum products supply needs of the entire Nigerian population both in short and long term.
He said the alleged production capacity of the refinery as regards AGO and Jet Oil (Jet A-1) were estimations not backed with scientific proof and the NMDPRA, as regulators, cannot depend on such data to allow the plaintiff own the sole right to cater for the market.
He said, having taken cognisance of the current state of affairs and in consideration of the oil production output at the preceding quarter before the filing of the suit, NMDPRA found that it would be premature and imprudent to suspend the importation of petroleum products for other entities and simply hand over the sole supply right to Dangote.
He said the present market structure of local refining would not only result in a monopoly with its pricing implications but also put at risk the nation’s energy security “which is best assured through multiple supply sources given the present market structure of local refining.”
SOURCE: gistnews.com.ng