INTRODUCTION
Energy is essential for socio-economic development, contributing significantly to poverty reduction, improved quality of life, and national security. Over the past 50 years, the World Energy Assessment has highlighted global advancements while underscoring the importance of energy security—defined as the reliable, affordable, and adequate supply of energy. Nigeria, one of Africa's leading energy giants, is endowed with abundant resources such as crude oil, natural gas, lignite, bitumen, and tar sands.
Nigeria has vast potential with the sixthlargest crude oil reserves globally, holding an estimated 36.2 billion barrels of oil and 5,000 billion cubic meters of 1 natural gas. Yet, despite these rich resources, the country faces enduring challenges in energy management and distribution, resulting in a gap between supply and demand.
Addressing these challenges is central to Nigeria's pursuit of energy security and selfsufficiency, which is the cornerstone of its petroleum policy. The National Petroleum Policy (NPP) of 2017 laid a foundation for the Petroleum Industry Act (PIA) by establishing strategic goals to tackle long-standing issues in the petroleum sector. This policy framework proposed comprehensive measures to enhance the domestic energy landscape by fostering a value-added industry, increasing refining capacity, and expanding the petrochemical sector. A central objective of the NPP was to reduce state dominance in the sector, which had previously limited private-sector participation. By refocusing oil as an economic growth driver rather than merely a revenue source, the NPP pushed for regulatory reforms, encouraged divestment from underperforming governmentowned refineries, and incentivized private investment. Ultimately, the NPP envisioned a 2 robust refining sector that could generate revenue from both refining capacity and refined products, positioning Nigeria for long-term growth and resilience in the global energy market. Within this framework, the government has empowered regulatory agencies to create a conducive environment for meeting domestic energy needs and stimulating local industry growth. This article explores Nigeria's broader energy security and self-sufficiency objectives, using the recent lawsuit filed by Dangote Petroleum Refinery and Petrochemicals ("Dangote") against the Nigerian Midstream and Downstream Petroleum Regulatory Authority ("the Authority") and 6 other companies as a focal point for discussion.
Licensing Powers of the Authority
In Nigeria's evolving petroleum sector, regulatory powers, particularly licensing, are critical in shaping market dynamics and competitive balance. The Authority is responsible for issuing licenses, including import licenses, under the PIA, which has significant implications for industry operators. Section 174 of the Act requires operators in the midstream and downstream sectors to conduct specified activities under licenses granted by the Authority. These activities include establishing, constructing, and operating terminals for the export or import of crude oil or petroleum products; operating crude oil refineries; managing pipelines for the bulk transportation of petroleum liquids; overseeing bulk storage and sale of petroleum liquids; managing transportation networks for petroleum liquids; and operating facilities dedicated to the production of petrochemicals derived from petroleum products. Additionally, operators must hold licenses to conduct the distribution, storage, marketing, or retail of petroleum products.
Where it relates to the establishment of refineries, the licence is issued by the Minister on the recommendation of the Authority.3
The Authority will only grant a licence for midstream petroleum operations where amongst others, it does not relate to midstream petroleum operations that would conflict with a licence already granted and has a detailed programme for the recruitment and training of Nigerians in all phases of petroleum operations handled by the licensee and provides for scholarship, internship s chemes with professional development and other training requirements.4
The Authority in granting a licence or permit must consider information presented in respect of an application for such license, including representations from interested parties in favour of or against the grant, extension or renewal of the license and it shall notify the applicant of its decision within 90 days of the application.6
Conditions for the Grant of a Crude Oil Refining License
Upon the approval of the Authority of an application for a grant of a crude oil refining license, and payment of the requisite fees by a qualified person, the Minister will grant and issue a crude oil refining licence permitting the licensee to construct and operate facilities to process and sell crude oil on its own account into derivative chemicals and petroleum products.
However, in considering an application for a crude oil refining license, the Authority will take into account the economic case for a refinery, including the potential demand for its use. The crude oil7 refiner on its part has the obligation to:
The crude oil refiner has the right of access to facilities, including harbours, jetties, petroleum bulk storage, transportation facilities and pumping installations in accordance with the open access requirements and a tariff methodology approved by the Authority9
Propriety of the Issuance of Import Licences by the Authority to NNPCL & 6 Ors
Sometime this year, the Authority issued Dangote a valid Licence to Operate (LTO) its 650,000 barrels per day capacity refinery. The LTO which was a pre-commissioning licence granted on a 'test-run-basis' permits Dangote to produce products such as Automotive Gas Oil (AGO), jet A1 fuel (aviation turbine fuel) and kerosene to be released into the market under regulatory supervision. The refinery in April this year started releasing AGO to the domestic market.
Dangote Petroleum Refinery and Petrochemicals FZE (Dangote) in a suit commenced at the Federal High Court Abuja is seeking the award of N100 billion in damages against the Authority for allegedly proceeding to issue import licenses to NNPCL and 6 others for the importation of petroleum products such as AGO and Jet-A1fuel into the country despite the fact that its daily production of these products exceeds the current daily consumption of petroleum in Nigeria which the company said was in breach of the PIA. Additional reliefs sought by Dangote 10 include an order directing the Authority to seal off all facilities used by the defendants for storing imported refined petroleum products, a declaration that Dangote, registered as a Free Zone Enterprise (FZE), is exempt from all federal, state, and local government taxes, levies, and rates, a declaration that imposing additional levies (the 0.5% levy) by the Authority on it is contrary to various legislative acts, and an order directing the Authority to withdraw all import licenses issued to the defendants.11
The objectives and functions of the Authority amongst other things are to promote, establish and develop a positive environment for international and domestic investment in the midstreamanddown stream petroleum operations, promote the principles of economic development of infrastructure, and competition and private- sector participation in midstreamanddown stream12 petroleum operations.
The PIA tasks the Authority with regulating import licenses based on a participant's commitment to local refining, competitive pricing, and supply chain efficiency. This approach aims to secure long-term supply sustainability and reduce import dependency, benefiting both the industry and consumers in Nigeria. Section 317(8) of the Act gives the Authority the discretion to implement a Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining. This implies prioritizing efforts13 and incentives to reduce dependence on imports of refined petroleum products. The Act14 empowers the Authority pursuant to section 317(8) to assign a licence to import any product shortfalls to companies with active local refining licences or proven track record of international crude oil and petroleum products trading.
he implication of the power of the Authority to apply the Backward Integration Policy under Section 317(8) and (9) is that ideally, it is only where a shortfall exists in locally refined products that importation licenses to cover the deficit can be given to companies that either already hold local refining licenses or have a credible history in crude oil and petroleum trading. These provisions strive to encourage investment in local refining capacity and limit the pool of import license recipients to those companies that are actively in local refining or have the expertise to ensure reliable supply evidenced by their solid international trade record. The issuance of import licenses to NNPCL and other companies, despite Dangote's current production capacity, raises significant questions regarding the intent and application of Sections 317(8) and (9) of the Act. However, Dangote's suit alleges that the issuance of import licenses to companies such as NNPCL and others for products like AGO and Jet-A1 fuel, despite local supply capacity, contradicts these objectives. Dangote argues that the domestic market's demand can be met with its current production, and therefore, additional imports undercut the intended impact of the Backward Integration Policy by creating unnecessary competition with locally refined products. If true, this could undermine the policy's goal of fostering a reliable local supply chain and attracting further investment in refining infrastructure by domestic players and foreign investors. The Authority, however, may argue that it retains regulatory discretion to issue import licenses based on broader criteria that include market stability, consumer protection, and ensuring uninterrupted supply
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