A call has been made to the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Federal Competition and Consumer Protection Commission to protect traders’ rights to import petroleum products into the country.
This comes amid concerns that depot owners and importers may go out of business due to the country’s growing local refining capacity.
Stakeholders said the depot owners have been there to give Nigerians energy security at a time when the nation’s refineries went moribund for decades, saying it would be unfair to discard them and their investments now that the refineries are coming up.
With the Dangote and Port Harcourt refineries coming on stream, the nation is moving towards ending fuel importation as an oil-producing nation.
On Sunday, it was reported that the Crude Oil Refinery Owners Association of Nigeria projected that the importers may go out of business soon if they refuse to follow the local refining trends.
Last year, a billionaire businessman, Femi Otedola, asked depot owners to dismantle their depots and sell them as scrap.
While congratulating Aliko Dangote for the launch of petrol production at the 650,000 barrels per day facility, Otedola said, “I am reminded of the time you revolutionised the cement industry in Nigeria. Ships that once brought in cement turned into rusting relics, scraps of a bygone era.
“Now, with your refinery in full swing, I foresee a similar fate for fuel imports. The depot owners should take heed—it’s time to dismantle those depots and sell them as scrap while the market is still high. The world has changed, and those who do not adapt will be left behind.”
Otedola recalled that when he ventured into the depot business with Zenon, it was in response to the “inefficiencies of the Nigerian National Petroleum Company Limited.”
According to him, “Zenon pioneered the diesel business in Nigeria and quickly became the largest in the country, filling the gaps left by our inefficient system. But today, your refinery stands as a beacon of what is possible when one has the audacity to dream and the tenacity to see it through.”
Similarly, the Dangote refinery has also gone to court to stop the importation of refined petroleum products into the country.
However, experts said the Petroleum Industry Act allowed competition in the downstream sector, and importers should be allowed to operate to make the market competitive.
The experts stressed the need for the regulatory agencies in the downstream oil sector to up their game in the enforcement of standard market practices to encourage fair competition.
During an interactive session on the future of the Nigerian oil and gas industry in Lagos, the Chief Executive Officer of AHA Consultancies, Mr Ademola Adigun, said the promotion of competition or a market-driven petroleum industry in Nigeria is essential to attracting the needed investments across the oil and gas value chain.
At the session organised by the Institute for Energy and Extractive Industry Law, Adigun argued that the NMDPRA and the FCCPC must always be active in monitoring the market to avoid what he called anti-competitive behaviours.
Adigun acknowledged the impact of the Dangote Petroleum Refinery in petroleum refining and supply landscape, saying the $20bn facility has launched Nigeria to the world as a refining powerhouse.
Adigun mentioned that Dangote refinery cannot be said to be a competitor to tank farm owners or the NNPC, saying it is competing strongly with major refineries across the world, owing to its size, technological innovation, and product quality, which is now within the approved 50 Parts Per Million.
The expert noted that Dangote’s products are even cheaper in price than its competitors across the world, attributing the feat to several factors, including the recent crash in oil prices, the naira-for-crude initiative, and the company’s efficiency driven by innovation.
He explained that it would not be a good idea for the Nigerian government to ban the importation of petroleum products into the country, stressing that this may lead to a monopoly and several anti-market practices that are not good for any sector.
“The NNPC refineries cannot compete with the Dangote refinery, and the importers are not its competitors either. Dangote is instead competing with big refineries across the world. So, it’s only when Nigeria has more refineries of Dangote size that it will make more sense to stop the importation of fuels,” he stated.
Adigun added, “The country still needs to import now to check monopolistic tendencies. The tank farm owners were the ones who saved this country during those years when the refineries were not working.
“In fact, Otedola himself was in the diesel business. It would not be fair to say those people should lose their investments just like that. That’s why the NMDPRA and the FCCPC should always protect all investors in the sector. They should ensure fair competition between refiners and importers for the good of the nation.”
A consultant at the Institute for Energy and Extractive Industry Law, Dr Taiwo Ogunleye, who spoke on ‘Understanding Anti-competitive Practices in the Midstream and Downstream Petroleum Industry,’ maintained that the lack of a competitive market could lead to a single player determining the price of products.
He said such practices must be checked by the regulators to boost investments in the sector and protect all players and consumers in the business.
“Anti-competitive market practices and behaviour in the midstream and downstream petroleum industry are activities performed by companies to undermine fair competition, negatively impacting market efficiency, prices, and consumer choices.
“Such practices may include price fixing, collusion, predatory pricing, market allocation, monopolisation or abuse of dominance, exclusive contracts, unfair restrictions in distribution and retail operations, refusal to supply or deal, discrimination in pricing, or limiting infrastructure access to competitors.
“These behaviours distort market conditions, creating artificial barriers for new entrants or smaller players, undermining transparency in the pricing process, harming consumer welfare, and hindering innovation and improvements in service quality,” he stated.
A Non-Executive Director at Aspen Energy, Mr Israel Aye, posited that competition is good for lowering prices for consumers, ensuring higher quality products and services, enhancing more innovations and choices, and for greater efficiency in operations.
Aye said the NMDPRA is empowered by the PIA to ensure “fair pricing and competition in the midstream and downstream petroleum operations.”
He quoted Section 205 (2) of the PIA as saying, “No person shall fix prices or restrict the supply of petroleum products except as provided under this Act.”
Aye noted that the FCCP Act empowers the FCCPC to monitor and investigate anti-competitive conduct across sectors, stating that this enables joint enforcement with the NMDPRA for energy-related competition issues.
He added that Dangote refinery’s case challenging the decision of the NMDPRA to issue import licences despite its capacity to meet local petrol demands is a crucial test of PIA compliance and local refining preference. The outcome, he said, may reshape PMS import policy in Nigeria.