The House of Representatives on Tuesday underscored the need to protect domestic refineries as part of ongoing efforts aimed at the actualisation of the energy security policy and attracting foreign investments into the country.
Chairman, House of Representatives’ Committee on Petroleum Resources (Downstream), Hon. Ikenga Ugochinyere, stated this in Abuja during an interactive session with the Independent Petroleum Marketing Association of Nigeria (IPMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Major Energies Marketers Association of Nigeria (MEMAN) on importation and domestic refining in the downstream petroleum sector.
In his remarks, Hon. Ugochinyere, who harped on the need to resolve all contentious industry-wide issues, said: ‘We’ll be meeting with the NMDPRA, NUPRC, and the refiners, both the modular refinery owners and the big-time refinery owners, and also with NPA and other regulated bodies, both CBN, on the issues that have been raised. Because this will form part of our downstream reform, both for the amendment of the PIA and for the motions that will move on some of the issues that need to be corrected. And that is why we needed to meet with the people.
‘And also, we have taken special note of the issue you raised on the issue of dollar denominated charges by the Nigerian Port Authority. It’s not good for the economy that at this point, that the FS market has that we should be charging people who are dealing with domestic downstream activities in dollar. That affects the pump price of the PMS.
‘So that we have also taken note of. We have also taken note of what you said about the lopsidedness in the issuance of the import license, where you talked about both the first quarter, second quarter, and third quarter was given to a particular set of people.
‘Those questions, we are going to raise it when NMDPRA comes here, to find out how they arrive at the parameters they use in issuing those licenses. So we looked at all those issues, and then the one that has to do with the safe transport corridor, we’ll also take up with the Ministry of Works on how to ensure that the corridors for transportation is safe and accessible for those who are dealing in transportation of those petroleum products.
‘And also, one other issue that we’ll ask you people to help us, maybe when you are submitting your additional submissions, is that, because we are looking for solutions.
‘One, this issue of domestic refining and importation are issues that we should not shy away from. First of all, how do we protect and encourage owners of domestic refineries and how do we also protect the business of importation in terms of, are we going to continue importing the way we have been importing before the coming of these refineries, knowing fully well that more refineries are coming up. So in a matter of four, five, or 10 years, we may have up to pick five or six refineries.
‘So now, and then how do we ensure national energy security? We have some backup, like you said. In case if there’s any issues with our refineries that the countries can continue to run smoothly without any problem. So we need you need to make an honest suggestion of you know, it mustn’t be an immediate solution.
But how do we find a balance between these issues? Because yes, these refineries are coming up. We must accept that. And also, these marketers and others have built infrastructures over the years, we must also accept that.
‘So how do we, as we are having these refineries, it does have a system whereby those who are into the business of refining must find a relationship with marketers in terms of how to build a chain that continues to sustain their businesses. And then the marketers must also find a way that we cannot continue to import the volume that we used to import before the coming of these refineries.
‘So we now agree, how do we now find a middle ground of this is what should be imported at any given time as a matter of national energy security to protect the country and immune it from crisis. But we can’t run away because this is the reason why there have been distinctions over and over again. So we have to look at these issues and we are banking on the deep knowledge people have in the industry to say, okay, this is the transition process. This is how it’s going to be in terms of the relationship that should exist between owners of domestic refineries and marketers and the future status of importation, how it can be regulated.
‘These issues are very important to this committee and I want to propose those motions and legislation that will help to resolve it before the end of this hour assembly. So it’s very important that you guide us in providing those information. So when we now hear from the NNPCL, both from the NMDPRA and other stakeholders, we’ll get back to the people before we now make a decision as a committee.’
On his part, DAPMAN Executive Secretary, Mr Olufemi Adewole, who spoke on behalf of 37 depot owners and petroleum products bulk marketers and retailers involved in the supply, sourced locally or via importation, storage, distribution and sale of refined petroleum products in Nigeria, solicited for the House’s intervention in the formulation of good policies for the benefit of the economy and the Nigerian public generally.
He also highlighted the general challenges currently confronting marketers in the downstream sector, namely: short profits stemming from an uneven playing field, a structured trading environment where even with a single-source supplier, as well as issues relating to importation regulations and their impact on operations, issues relating to domestic refining, including engagement with local refineries and its effect on supply and pricing, and other matters.
He said: ‘From the records of the regulator NMDPRA, a staggered number of not less than 72 out of the 154 depots nationwide had no regular or consistent trading activity in the last one year. That is to tell you that they are just paying salaries and they are not doing any trading activity. This was primarily due to the uneven playing field, incessant trading activity losses, single-source supply environment, and inability to secure an alternative source of supply rather than a lack of interest or capacity.’
He, however, noted that as domestic refining output grows and national demand increases, the trucking model cannot absorb the additional volume without significant safety costs and congestion consequences. The Nigerian downstream petroleum sector, and indeed all Nigerians, welcomed the commencement of operations by the Dangote Refinery and had looked forward to the nation finally becoming self-sufficient through the refining capacity.
Our experience, and indeed that of the nation, has been that of mixed feelings, bordering on an almost total monopoly of the supply of premium motor spirit, or PMS, by the mega-refinery. As enshrined in the PIA 2021, the sector is fully deregulated, and as such, prices of petroleum products are determined by the interplay of free market parameters. However, we dare say that this is not the case. This has not been the experience, as we noted several drops towards the end of last year, and a few within the first half of 2026. The mega-refinery had announced and enforced prices outside the influence of the interplay of market forces, and this should not be allowed to continue.
‘Issues relating to importation regulations and their impact on operations. We have noted the efforts of the regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, in their quest to provide against shortfalls in local refining volumes to meet required country needs. They had issued petroleum products import allocation slots and volumes to the same set of marketers in Q1 2026, the same set of marketers in Q2 2026, and the same set of marketers in Q3 2026. As if all other players in the sector are neither capable nor qualified. This is totally unacceptable to other players in the sector, and we would implore this esteemed committee to intervene and cause the regulator, the NMDPRA, to exhibit greater transparency and fairness in future fuel import allocations.’
According to him, after the refinery had earlier suspended coastal off-takes via ships, the suspension and the stoppage would have had very dire consequences for the nation had the import option been non-existent, which allowed for import permits to stave off the probability of serious shortfalls in fuel supplies.
In essence, and to avoid the embarrassing fuel queues rearing their head again, the import option, as enshrined in the PIA 2021, must be transparently executed and adhered to by all stakeholders. All domestic refineries should be encouraged to work with private depot operators on transparent, commercially sustainable, and mutually beneficial coastal and inland supply arrangements.
DAPMAN has engaged and will continue to engage the refinery management on trading and off-take service agreements and on the import option as enshrined in the PIA 2021.
The committee should encourage structured engagement, transparent nomination and allocation processes, and adequate advance notice of product availability so that depots can plan inventory, financing, and distribution properly.
Beyond working capital constraints, depot operators face a range of specific operational and regulatory obstacles that increase costs, reduce reliability, and discourage investments. Key issues: shallow waterways and channel restrictions. No fewer than 20 of the 154 licensed depots can receive ocean-going vessels carrying in excess of 25,000 tons of petroleum products due to draft restrictions in the channels serving the major depot clusters. These include the Apapa and Ijegun channels in Lagos, Ogara, Calabar, Mbor, Port Harcourt, Warri, Escravos, and Koko axis. Operators are forced to lighter their cargoes using smaller daughter vessels rather than co-loading to accommodate larger volumes and improve efficiency.
‘Inadequate pilotage and towage services: The Nigerian Port Authority is statutorily responsible for the provision of pilotage and towage services. In practice, prepared stock boat assignments frequently fail to materialise, that is when NPA gives us a stock boat. Even though we are paid for it, these stock boats don’t show up, forcing depot operators to hire independent vessels at additional cost, costing loading delays and demoralised exposures.
‘Duplicated and foreign currency denominated port charges: DAPPMAN members and indeed all marketers continue to report duplicated charges on fuel-laden vessels engaged in purely domestic listings and discharge operations, particularly on vessels lifting products from Dangote’s Lekki refinery for delivery to other locations within Nigeria. Marketers are invoiced for loading operations at the refinery and again at the discharge port. More critically, certain charges continue to be enforced in U.S. dollars, despite the entirely domestic nature of these transactions. This practice persists, notwithstanding a presidential directive conveyed by the late Chief of Staff, Mallam Anba Kari, to the then Minister of Transportation, Rt. Hon. Rotimi Amaechi, directing the suspension of foreign exchange denominated billings for local operations. The directive appears not to have been implemented. DAPPMAN respectfully urges the committee to direct the relevant authorities to enforce compliance with this directive, fuel availability without a functioning depot, storage, and distribution network to move the product from the refinery gate to the consumers across the 36 states of the country. The two must coexist and be supported together.
Compliant import options should therefore remain available as regulated, balancing, and contingency mechanisms where there is refinery maintenance, outage, product quality issue, allocation delay, logistics bottleneck, port disruption, or any period in which domestic supply is inefficient. We strongly recommend the introduction and implementation of a competitive market framework supported by relevant sections of the PIA, including Sections 32, 182, 184, 205, 211, and 212, that ensure the continuous survival of the market.
DAPPMAN implores the House of Representatives Committee on Petroleum Resources Downstream to direct the development of a national downstream logistics map identifying priority product distribution corridors, critical bottlenecks, roads, bridges, depots, access points, channel depths, and specific infrastructure investments required to move Nigeria away from its current total dependence on truck hauling. The reactivation of the NNPCL pipeline and depot network is an important structural action available to address Nigeria’s logistics vulnerability.
The Committee should prioritise a credible assessment and a phased rehabilitation plan for viable pipeline corridors with clear operating responsibilities and a commercial tariff structure. Rail freight should be piloted on corridors where sufficient recurring volumes, safe loading and start infrastructure, and viable tariffs can be demonstrated.
‘The ongoing expansion of Nigeria’s rail network presents an opportunity to significantly develop rail-based petroleum product distribution for long-distance corridors.
‘The Federal Government should direct the NNPCL’s committee to urgently commence the dredging of channel routes serving major depot clusters, and the National Hydrographic Authority should update its navigational maps to support safe vessel passage at higher draft levels.
‘We urge that the Committee may want to embark on a troubleshooting effort on some of the stalled dredging projects, as the already approved plans only require strategic impetus for implementation and execution. Dredging of waterways and channels enables larger vessels access to more depot locations, improving economies of scale and reducing per unit supply costs.
‘The Cabotage Fund administered under the Federal Ministry of Transportation and Blue Economy should be reviewed with a view to a comprehensive plan for the development of the NNPCL. It should be reviewed with a view to accelerating disbursement to qualifying indigenous ship owners who are currently excluded from meaningful participation in domestic petroleum product freight operations, a sector with an annual turnover running into hundreds of millions of U.S. dollars.
The NNPCL pipeline network, a vital part of Nigeria’s strategic energy infrastructure, must be reactivated and repositioned to function as a primary distribution channel for petroleum products.
‘The existing NNPCL depot network, if rehabilitated and strategically operated, could serve as the initial pilot location for Nigeria’s strategic reserve, given its national spread across all geographical zones,’ the DAPPMAN helmsman noted.
In his presentation, National President Alhaji Abubakar Shettima averred that the Federal Government’s efforts to rehabilitate public refineries, encourage private investors in refining, improve regulatory oversight, and promote a competitive downstream market represent significant milestones towards strengthening Nigeria’s energy security and reducing dependence on imported petroleum products.
‘Nevertheless, substantial challenges remain. Rising financing costs, multiple taxation, excessive regulatory charges, logistic constraints, inadequate storage infrastructure, limited access to refinery products, pipeline vandalisation, foreign exchange volatility, and insufficient institutional consultation continue to affect efficient petroleum distribution and increase costs ultimately borne by Nigerian consumers.
‘The recommendations contained herein seek to balance the interests of government, consumers, investors, refiners, marketers, and regulators, while promoting transparency, competition, efficiency, and long-term sustainability.
While applauding President Bola Tinubu for removing substantial challenges and allowing the market to take the initiative, he underscored the need to strengthen domestic refining while preserving healthy market competition, ensure direct equitable access by marketers to locally refined petroleum products, and reduce avoidable regulatory costs that inflate pump prices.
Alhaji Shettima also called for improved access to affordable financing for downstream operators, modernisation of petroleum transportation and storage infrastructure as part of overall efforts aimed at promoting national energy security through strategic reserves, and encouraging investment and innovation within the downstream sector. He also called for the institutionalisation of stakeholder consultation in petroleum policy formulation.
Alhaji Shettima also called for a policy that would encourage multinationals involved in the importation of petroleum products to invest in domestic refineries, saying: ‘Since the coming of this private refinery, we independent petroleum marketers, we have come to observe there is proper supply of petroleum products and there is no queue and we come to realize that before we pick a product, when there is no active refinery, we have a lot of debts on by other supplier to us.
‘But presently now, we buy on cash and carry basis and get the product and discharge in our filling station.
Bxut that does not mean completely we are saying there is no importation. But what we are trying to say, let’s encourage Nigerian refiners because in the other days we fully depend on importation. But now today, Nigerians have started exporting petroleum products outside. And we are not doing this, so what we are always advocating we are trying to say those multinational companies let them see how they can construct refinery in Nigeria, so that to support the refinery that has started.
‘Then about the issue of taxation, the reason why you see we cry out about taxation, we independent petroleum marketers they normally charge us on our turnover and our turnover is always constant. But we have a restricted profit, so if the charges are so high, we have no option than to add that charges to Nigerian masses which is not good. So that is the reason why we are crying about taxation and the bank too, we are proposing if you will go through the memorandum that we have sent, we are proposing we petroleum marketers let’s have a Petroleum Bank that will give us a single digit charges, instead of going to the bank and carrying 32% charges because that 32% if we carry loan through the bank we are going to have a single digit charges so that is the reason that we are crying about taxation so that is the reason we have to carry 32% charges to the masses in terms of buying products.
‘So if we are like Bank of Industry now whereby they subsidize their existing Bank of Agriculture, so we want Petroleum Bank, so that the charges will become less and the product that we are selling too will reduce the price to the masses.’
While responding to the question bothering on abundant refineries that are not functioning, he said: ‘we independent petroleum marketers we are happy to see that all Nigerian refineries are functioning. But that question will be referred back to the NNPC they are the best people to answer this question but if a single handed bank can be able to construct a new refinery that at least will carry most of the Nigerian consumption and even carry it outside, I have seen no reason why Nigerian refineries too will not function.
But through our submission if Nigerian refineries if the government will allow independent petroleum marketers to participate in getting this refinery, we can be able to do our best to see that this refinery started functioning because this independent petroleum marketer that you have seen we constructed our private refinery well, private depot during Olusegun Obasanjo who supported us we bought the refinery which is now owned by Dockyard Land Liber Brozer in Dockyard and which is the NIPCO today. And if you observe NIPCO today is one of the biggest oil marketer in Nigeria today in terms of distribution.
‘So NIPCO is owned by independent petroleum marketers so the same thing if that hand can be put to the refinery I know definitely we can do our best to see that we revive this Nigerian refinery and start functioning.’