Oil & Gas

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has raised alarms about the Nigerian government's decision to grant import licenses to petroleum marketers, warning that it could jeopardize the country's refining capacity and economic recovery. The association’s concerns stem from a growing debate between local refiners and marketers, particularly over the competition posed by Dangote Refinery, the largest in the country. While marketers, represented by associations like the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), have expressed intentions to import petrol at prices lower than those set by Dangote, CORAN argues that this move could flood the market with substandard products and harm local refining efforts.

CORAN's Publicity Secretary, Eche Idoko, emphasized that granting import licenses to marketers, especially those importing low-quality products, would undermine the local refining sector. He specifically warned that some international traders were attempting to dump off-spec petroleum products, rejected in other parts of the world, into the Nigerian market. Idoko also pointed out that the Petroleum Industry Act (PIA) advocates for a reduction in imports of products that the country can refine locally, yet the NMDPRA continues to issue licenses. He expressed concerns that this undermines the progress of Nigerian refineries and weakens the country's energy security by maintaining reliance on imported fuel.

The controversy has sparked legal action, with some oil marketers filing a suit to prevent Dangote Refinery from taking control of the oil industry. AYM Shafa Limited, A.A. Rano Limited, and Matrix Petroleum Services Limited argue that allowing Dangote’s refinery to dominate the market would be disastrous for competition and the broader petroleum sector. They are challenging the refinery’s attempts to annul their import licenses, asserting that such control would lead to an unhealthy market monopoly. These marketers, along with the Nigerian National Petroleum Corporation (NNPC) and NMDPRA, are engaged in a legal battle over the future of Nigeria’s oil importation and refining landscape.

Meanwhile, the country’s oil marketers have also benefited from the government’s decision to remove petroleum subsidies, which has allowed for a more market-driven environment. This shift has enabled marketers to see significant financial gains. For example, in the first nine months of 2024, four major oil marketers reported revenues of approximately N1.3 trillion, a sign of the growing profitability in the sector. However, this rise in profits has fueled the ongoing tension between marketers and local refiners, highlighting the delicate balance Nigeria must maintain between encouraging domestic refining and managing the influx of imported petroleum products.