Nigeria now refines more petrol at home than at any point in its history, and the NMDPRA is still issuing import licences. On 28 September 2026, the Federal High Court in Abuja went further, ordering the regulator to keep granting petrol import licences to three major marketers. For refinery investors, that raises a pointed question: does the Petroleum Industry Act (PIA) protect local refineries from imported fuel at all? The answer sits in Section 317. It does not ban imports. It gives the NMDPRA discretion to apply a Backward Integration Policy and to license imports for “product shortfalls”, and the National Assembly deliberately made that protection weaker than the Senate first proposed. Here is what Section 317 actually says, what the court decided, and what it means for anyone financing a refinery in Nigeria.
What Does Section 317 of the PIA Say About Fuel Import Licences?
A common narrative suggests that the Petroleum Industry Act (PIA) automatically bans or halts fuel imports the moment domestic output can fulfill local demand.
Under Section 317(8) of the PIA, the downstream regulator is given the discretion to implement a Backward Integration Policy designed to stimulate investments in local refining infrastructure. Following that, Section 317(9) provides that import permits for any product shortfalls may be allocated to entities holding active local refining licences or those with established trading records in international crude and petroleum derivatives. Section 317(10) further outlines the administrative formulas for distributing those import volumes.
This framework introduces two critical dimensions:
- The Gap-Filling Design: The statute explicitly frames importation around managing supply “shortfalls,” giving credence to the argument that imports are intended as a supplementary safety valve rather than an unrestricted open door.
- The Regulatory Balancing Act: While Section 317(8) authorises the use of backward integration, that discretionary power must be harmonised with the regulator’s overarching statutory duties to prevent anti-competitive behaviour and ensure fair market access.
A historical review of the legislation highlights how this balance shifted during the drafting phase. The initial Senate version of the Bill took a heavily protective stance, mandating that the regulator shall apply the backward integration policy and restricting import licences only to entities with active local refining credentials. During final harmonisation, however, the language changed: “shall” was softened to “may,” and the pool of eligible applicants was broadened to incorporate firms with international trading backgrounds. Consequently, the absolute market insulation initially envisioned for local refiners was considerably diluted. For project developers and financing syndicates evaluating long-term capital commitments, this legislative structure creates a complex risk profile. Relying solely on local production protection involves navigating a regulatory discretion that balances industrial incentives against open-market competition rules.
What the September 2026 Court Ruling Means for Fuel Import Licences
On 28 September 2026, Justice Inyang Ekwo of the Federal High Court in Abuja ruled for three marketers — Matrix Energy, A.A. Rano and AYM Shafa, who had complained that the NMDPRA was renewing their import licences only sporadically. The court ruled decisively in favour of the marketers, affirming that once applicants satisfy the requisite regulatory thresholds, the statutory duty to issue or renew licences must be fulfilled. In reaching this conclusion, the court anchored its reasoning on the NMDPRA’s foundational mandate to foster market competition under Sections 31, 32, and 211 of the Petroleum Industry Act (PIA) 2021, read in conjunction with the market-discipline framework of the Federal Competition and Consumer Protection Act (FCCPA) 2018.
Simultaneously, related litigation continues to wind through the judiciary. Dangote Refinery’s separate legal challenge regarding import approvals issued earlier in the year (Suit No. FHC/L/CS/857/2026, domiciled in Lagos) remains active, with further hearings scheduled for 7 October 2026.
Why Is Nigeria Still Importing Petrol Despite Local Refining?
The common-sense argument is strong: an importer pays for product, freight, insurance, financing and port charges, so how can imported fuel ever beat fuel refined 40 kilometres from the depot?
Those costs do not, however, make imports automatically noncompetitive. Final price competitiveness also depends on crude costs, refinery efficiency, financing structures, logistics and prevailing international product prices. More importantly, the threat of imports is what keeps a dominant domestic supplier honest. Remove it entirely and Nigeria swaps an import dependency for a monopoly dependency.
So both camps are half right, which is why this argument never resolves. The real question is not imports or no imports. It is who decides, on what evidence, and can anyone check the maths?
From the information currently published, the public cannot readily reconstruct the calculation behind the approved volume. The regulatory question becomes sharper when the latest supply data are placed beside the import approvals. NMDPRA approved about 830,000 metric tonnes of petrol imports for Q4 2026, even as its April fact sheet recorded near-full utilisation at Dangote Refinery and the refinery subsequently reported a June performance test above 700,000 barrels per day. Those figures do not, by themselves, prove that a national supply shortfall did not exist; they do, however, reinforce the case for a transparent methodology showing how the approved import volume was calculated.
What Nigeria’s Cement Sector Teaches About Backward Integration
The inclusion of a “Backward Integration Policy” under Section 317(8) of the Petroleum Industry Act mirrors the strategy that successfully shifted Nigeria’s cement sector from heavy import dependence to self-sufficiency and eventual export. That historical model succeeded because it enforced a strict, predictable timeline: domestic production capacity scaled up while import access systematically tapered off.
However, the downstream petroleum framework operates with greater regulatory discretion. Unlike the rigid, timeline-driven milestones of earlier industrial blueprints, the statutory wording governing petroleum import allocations and local refining thresholds leaves room for interpretation, a flexibility that currently sits at the heart of intense legal and market contests.
What Fuel Import Licensing Means for Refinery Investors in Nigeria
For modular refinery promoters, foreign strategic investors and lenders, several issues should be resolved before closing financial deals.
- First, obtain written clarity on how a product shortfall is determined and communicated.
- Second, structure off take arrangements on the assumption that imported products may remain part of the market.
- Third, include robust change-in-law and regulatory-event protections.
- Finally, assess export optionality, particularly where the project can serve regional markets. Where a licence decision appears to ignore the Act’s own criteria, the Section 317(10) allocation factors and the Authority’s duty to act within its statutory framework give you something to challenge – the Abuja judgment cuts both ways.
For policymakers, the more credible framework is to link import approvals to a published assessment of actual domestic supply, demand and inventory, while retaining an import window for demonstrable gaps.
Frequently Asked Questions
1. Does the Petroleum Industry Act ban fuel importation when local refineries can meet demand?
No. The legislation does not impose an absolute ban. Under Section 317(8) of the Petroleum Industry Act (PIA) 2021, the regulator is empowered to implement a Backward Integration Policy designed to stimulate domestic refining. Concurrently, Section 317(9) provides that permits for product shortfalls may be allocated to eligible corporate entities. The statutory phrasing is deliberately discretionary rather than mandatory. Although a stricter, mandatory restriction was floated during the Senate’s drafting phase, it was omitted from the final enacted statute.
2. Who issues petrol import licences in Nigeria?
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) holds this mandate pursuant to the PIA 2021. Section 317(10) dictates that allocation metrics must factor in the applicant’s preceding quarter refining output, wholesale market share, pricing competitiveness, alongside historical performance in product supply, logistics, and storage infrastructure.
3. What did the court decide about fuel import licences in September 2026?
On 28 September 2026, Justice Inyang Ekwo of the Federal High Court in Abuja delivered a judgment ordering the NMDPRA to maintain the issuance and renewal of product import authorisations for Matrix Energy, A.A. Rano, and AYM Shafa. The court based its decision on the interplay between the PIA’s market competition provisions (Sections 31 and 32) and the overarching framework of fair trade safeguards. Meanwhile, a parallel action initiated by Dangote Refinery in Lagos (Suit No. FHC/L/CS/857/2026), which challenges prior import allocations, remains active on the docket.
4. Why is petrol still expensive in Nigeria despite local refining?
Domestic refining removes freight and some import costs, but crude is bought at international benchmark prices, and refiners also carry financing, FX and operating costs. Pump prices therefore track global crude prices, exchange rate movement and domestic crude supply availability more than refinery location alone.
5. Is it safe to invest in a modular refinery in Nigeria?
A modular refinery can be commercially viable, but regulatory uncertainty is a material part of the investment risk. Investors should assess licensing, crude supply, off take, pricing, import competition, financing, FX exposure and export options before committing capital. Because import protection under the PIA is discretionary, investors should seek written clarity on shortfall determination, structure off take agreements assuming import competition, include robust change-in-law protections, and evaluate export optionality before financial close.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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