The recent judgment of the Federal High Court, Abuja, directing the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to continue granting and renewing petroleum product import licences to Matrix Energy, A.A. Rano Nigeria Limited and AYM Shafa Limited raises fundamental questions about the future of Nigeria’s domestic refining industry and the proper interpretation of the Petroleum Industry Act (PIA), 2021.

The judgment presents substantial questions of law that deserve urgent appellate consideration, particularly regarding the relationship between competition, backward integration and the statutory discretion of the petroleum regulator.

At the heart of this controversy is a simple question: Did the National Assembly intend to establish a petroleum industry perpetually dependent on imported refined products, or did it deliberately provide a legal framework to encourage domestic refining while permitting imports to address supply shortfalls?

The answer must be found in the PIA itself.
Section 317 of the PIA: A Provision That Cannot Be Ignored
Section 317(8) expressly empowers the NMDPRA to apply the Backward Integration Policy to encourage investment in local refining. Subsection (9) provides for the issuance of import licences to address product shortfalls, while subsection (10) establishes the considerations governing import-volume allocation, including refining output, competitive pricing and distribution capacity.

These provisions were deliberately included in the Act. They cannot be treated as mere legislative decorations.
Admittedly, Section 317(8) uses the word “may”, thereby conferring discretion upon the regulator rather than imposing an absolute prohibition on imports.

However, that discretion is a statutory power which must be exercised lawfully and consistently with the objectives of the legislation.

It is therefore difficult to reconcile the spirit of these provisions with any interpretation that effectively converts petroleum importation into a continuing commercial entitlement, irrespective of domestic production and supply considerations.

Competition Cannot Be Interpreted in Isolation
The learned trial Judge reportedly relied on Sections 31, 32 and 211 of the PIA, read together with Section 72 of the Federal Competition and Consumer Protection Act, in reaching the conclusion that the regulator must promote competition and prevent market dominance.

There is nothing objectionable about that principle. Indeed, competition remains essential to ensuring fair pricing, product availability and consumer protection.
However, competition is not synonymous with unrestricted importation.
The PIA envisages competition within a petroleum industry that also encourages domestic investment, production, refining, storage and distribution.
Section 309 further establishes the precedence of the PIA over inconsistent provisions of other enactments in matters governed by it, subject to the Constitution and the statutory exception relating to the Nigerian Oil and Gas Industry Content Development Act.

Consequently, the general competition provisions of the FCCPA must be reconciled with the specific petroleum-sector framework under Section 317.

The principle of harmonious statutory interpretation requires that legislation be read as a whole, giving effect to all its provisions rather than allowing one provision to render another ineffective.

A Substantial Question for the Court of Appeal
It is important to acknowledge that the reported judgment makes the issuance and renewal of import licences conditional upon the companies satisfying applicable statutory and regulatory preconditions. It does not expressly grant an unconditional right to import petroleum products.

Nevertheless, a substantial question remains: Does the continued entitlement contemplated by the judgment preserve the regulator’s discretion to implement backward integration, assess domestic supply shortfalls and determine import volumes under Section 317?

This is a legitimate question deserving appellate clarification.
An appeal could properly invite the Court of Appeal to determine whether the general obligation to promote competition can override, diminish or restrict the specific statutory powers conferred upon the NMDPRA to encourage local refining and regulate petroleum product imports.

It should equally clarify whether satisfying ordinary administrative licensing requirements automatically establishes entitlement to importation without consideration of the broader statutory framework.

These are questions extending beyond the commercial interests of the three marketers. They concern the regulatory foundation upon which Nigeria’s refining industry is being developed.

Nigeria Must Not Punish Those Who Invest in Domestic Production
For decades, Nigeria exported crude oil and imported refined petroleum products, effectively transferring substantial economic opportunities, industrial development and employment to foreign economies.

Today, indigenous refinery developers are making considerable investments to reverse that unfortunate economic model.

From large-scale refining investments to modular refinery projects across the country, investors have committed resources to land acquisition, environmental studies, engineering, licensing, construction and infrastructure development, often under extremely difficult financing conditions.

It would be economically counterproductive to encourage such investments on the strength of a statutory backward integration framework, only to interpret that same legislation in a manner that potentially weakens the regulatory support contemplated for domestic refining.

This is not an argument for protecting inefficiency or creating monopolies. Local refiners must compete on pricing, quality, efficiency and reliability. Consumers must equally be protected against supply shortages and exploitative market practices.

However, where domestic production can demonstrably meet demand, importation should not be treated as an automatic alternative without regard to the statutory considerations established under the PIA.

The Way Forward
The NMDPRA should consider pursuing appellate clarification of the judgment, particularly regarding the proper interpretation of Sections 309 and 317(8)–(10).

More importantly, the Authority should establish and transparently implement measurable criteria for determining domestic production, actual supply shortfalls and the corresponding volume of imports required to maintain market stability.

This would protect consumers, preserve legitimate commercial participation and provide the regulatory certainty required by investors in domestic refining.

Nigeria cannot achieve industrialisation through legislation that encourages domestic production on one hand while permitting its industrial objectives to be weakened through inconsistent implementation on the other.

The courts have an important responsibility to interpret legislation, but the legislature’s expressed objectives must also be given their proper legal effect.

Backward integration is not a declaration of war against petroleum marketers. It is a statutory instrument for Nigeria’s industrial development. Competition must strengthen that objective, not defeat it.

The future of Nigeria’s refining industry deserves nothing less than a clear, consistent and purposeful interpretation of the Petroleum Industry Act.

Eche Stephen Idoko, LLB, BL, is the Publicity Secretary, CORAN.