Fuel scarcity, price hike looms as Dangote Refinery, PENGASSAN face-off deepens

• PENGASSAN directs member to cut off crude, gas supply
• Directive is economic sabotage, says Dr. Yusuf of CPPE
• You lack legal right to intervene in supply contracts, says Refinery

After a celebrated feat of eradication of fuel scarcity in the country in the last two years, the queues may be back anytime soon except the federal government makes a quick intervention. Yesterday, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) ordered its seven branches to cut off crude oil and gas supplies to the $20 billion, 650,000 barrels per day Dangote Refinery and Petrochemical facility located in Ibeju-Lekki, Lagos.
PENGASSAN’s directive was in response to the Dangote Refinery’s sacking of about 800 Nigerian workers. While the Refinery’s management explained the sack exercise as “part of an ongoing reorganisation to protect the facility from repeated acts of sabotage that had raised safety concerns and hampered operations,” the organized labour said it is an “act of anti-labour practices.”
In a letter dated September 26 and signed by its General Secretary, Lumumba Okugbawa, the union accused the refinery’s management of sacking its members in retaliation for exercising their constitutional right to join the union.
In a memo signed by the General Secretary of PENGASSAN, Comrade Lumumba Okugbawa, and issued to Branch chairmen in TotalEnergies, Renaissances, Chevron, Shell Nigeria Gas, Oando and Seplat Producing Nigeria Unlimited, the union directed the immediate shutdown of all valves and suspension of all crude loading operations to the Dangote Refinery facility.
“As you are aware, the Management of Dangote Petroleum Refinery has disengaged our members in reaction to the exercise of their constitutional right to be unionised.
“They have gone further on a mission of misinformation and propaganda to justify this illegitimacy rather than engaging meaningfully with us to right the wrong.
“Consequent to these, you are hereby directed to cut off gas supply to NGIC effective immediately. All crude oil supply valves to the Refinery should be shut. The loading operation for the vessel headed there should be halted immediately,” the directive read.
The union further mandated the NGIC Chairman to ensure strict compliance with the order and told all branch chairmen to give regular updates on the action taken.
“NGIC Chairman, ensure that gas supply to the Refinery is cut off effective immediately. All chairmen on this summons are to report promptly the progress of the directive. Kindly accept the assurances of our highest esteem. Thank you,” the statement read. The union also threatened to picket the refinery if the situation was not addressed.
Dangote Refinery however warned that the directive by PENGASSAN to cut crude oil and gas supplies to the refinery could plunge Nigerians into fresh rounds of fuel scarcity while inflicting huge revenue losses on the government.
In a statement released by the firm yesterday, the refinery described the directive as “criminal, reckless and an act of economic sabotage” that, if enforced, would disrupt the production and nationwide supply of critical petroleum products, including petrol, diesel, aviation fuel, kerosene, and cooking gas.
The company stressed that these products are indispensable to daily life and the economy, warning that Nigerians at every level, from households to businesses and industries would bear the brunt of shortages. It noted that a sudden disruption in supply will translate into insufferable hardship for millions of Nigerians.
“The products that would be disrupted and stopped include but are not limited to aviation fuel, petrol, kerosene, diesel and cooking gas – all products that are used and required by all stripes of Nigerians and persons living in Nigeria, whether high and mighty or lowly and ordinary. In what circumstance would it be justified for PENGASSAN to so disrupt and introduce insufferable hardship into the living conditions of Nigerians? None that we can see.
“The follow up question is, in whose interest and on whose behalf is PENGASSAN directing and intending to inflict such anarchic and criminal disruption upon the Nigerian society and persons living in Nigeria? Most certainly, not in the interest of the Nigerian State and/or the Nigerian public and citizens,” the company said.
Beyond the immediate hardship on citizens, Dangote Refinery warned that the government’s revenue would also be dented, given the refinery’s status as one of the country’s largest taxpayers and contributors to both federal and state coffers. The company said any pause in operations would stall contributions to the national purse and undermine investor confidence in Nigeria’s oil and gas sector.
The statement noted, “This is also economic sabotage against the Nigerian State at multiple levels. Dangote Refinery is the only refinery of its type in Africa and ordinarily should be the pride of all Nigerians as well as the governments of Nigeria. It should ordinarily have special protection and status and indeed qualifies as a strategic national asset”.
It added that an irreparable injury to the Dangote Refinery such as PENGASSAN has directed constitutes a national embarrassment to the country and a disincentive to external investors who ordinarily would have been encouraged by the success of Dangote Refinery to contemplate investing in Nigeria’s oil and gas sector or generally.
“PENGASSAN may also not be aware that Dangote Refinery is one of the largest contributors to the revenue purse of the Nigerian governments – both Federal and sub-nationals. That contribution is currently threatened by PENGASSAN and would of course be paused if and as soon as and for as long as the PENGASSAN directive is implemented by its branches,” it noted.
The statement also noted that PENGASSAN had no legal authority to interfere in supply contracts between the refinery and its vendors, insisting that the action undermined the rule of law.
“Absolutely no law gives PENGASSAN the right to direct its branches to “cut off” gas and crude oil supplies to Dangote Refinery at all. There is also no law in our statute books that would support or enable the PENGASSAN branches having to “cut off” gas and crude oil supplies to Dangote Refinery at all. Besides, it constitutes a criminal conduct for PENGASSAN or its members to disrupt and/or interfere howsoever in the contract between Dangote Refinery and its various vendors for the supply of gas and crude oil to the Refinery. Those supply contracts were not entered into with PENGASSAN; they were entered into by Dangote Refinery with third party vendors and suppliers and PENGASSAN has no right whatsoever to disrupt and/or interfere with the performance of those contracts.”
Calling on the Federal Government and security agencies to act swiftly, the refinery urged Nigerians to take note of the “unquantifiable and irredeemable hardship which PENGASSAN wishes to inflict on all of us” if not checked, warning that fuel queues, energy shortages and price hikes could quickly resurface.
It urged PENGASSAN to submit to amicable and legal resolution and not resort to economic sabotage and mob action that could introduce mayhem and chaos and easily translate into anarchy.
Stakeholders are worried over the development, warning of its dire consequences on the country’s economy. For instance, Dangote Refinery, it is believed, has been the stabilizing factor in premium motor spirit (PMS) or petrol supply and steady availability in the country.
Presently, on daily basis, the refinery produces lighter products of 104 million litres- 57 million litres of petrol; 20 million litres of jet fuel and 27 million litres of diesel. 44 per cent of these volume can meet the entire requirements of Nigeria while 56 per cent of the production are exported. This production capacity is sufficient to meet 100 per cent of Nigeria’s local demand for refined petroleum products. The facility, according to Aliko Dangote, had exported 1.1 litres of petrol in the last three months. Nigeria’s daily petrol consumption is put at between 46 million litres and 50 million litres.
But notwithstanding the refinery’s capacity to meet local demands, Nigeria’s fuel import reliance rose to 71 per cent of total petrol consumed domestically in the month of May and June, 2025. The remaining 28.62 per cent was sourced from the Dangote Petroleum Refinery. By implication, marketers, who should access products locally are instead spending foreign exchange to import refined petroleum products.
This was contained in data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in its July report presented to Federation Account Allocation Committee (FAAC). NMDPRA is the downstream regulator of the oil sector.
The report further gave a breakdown which indicated that in the period, the petrol consumed amounted to total of 1.478billion litres. Of this total, only 455,188,512 litres was sourced from local refineries, leaving 1.023,128,233 to importation. The 1.478 billion litres of petrol consumed in June was a 16.42 per cent decrease from 1.768 billion litres supplied in May.
The report also indicated that the average daily petrol supply for the month was 49.277 million litres, of which 34.104 million litres was imported and 15.172 million sourced from local refineries.
The total Automotive Gas Oil (diesel) consumed for the month was 432,180, 605 litres. This is 1.73 percent higher than 424,829, 199 consumed in the month of May. Of the total 432,180, 605 litres consumed in June, 378,130,852 was imported while 58,049,753 was from local refineries. Similarly, the average daily supply was 14,406,020 litres, of which 12,604,372 was imported and 1,801, 658 was locally sourced.
But stakeholders still maintained that notwithstanding these figures, PENGASSAN’s directive to shut gas and crude supply to Dangote refinery would still have a telling effect on the economy and by extension motorists. Besides, they cautioned that the unions may be over reaching with their actions.
The Chief Executive Officer, Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the idea of going to cut off gas supply, coal supply to Dangote is a disproportionate response to this particular development.
“We are talking here about issues of energy security. We are also talking about what exactly is in consonance with labour laws. If there are issues with an employer, I think there are processes to go about it. There are processes of resolving disputes. You have industrial courts, you have other processes. This particular step, for me, is going to the extreme.
“I don’t think that is the way to go. In all of these issues, you never can tell what the motive is because most of these people, including the unions, these are people who have been major beneficiaries of the importation regime. The coming into the industry of Dangote Refinery normally has created a lot of disruption and those who are benefiting from the status quo, including even some of these unions, are not likely to be happy with it.
“But what is more important in all of this is to ensure that due process is followed even by the unions. I don’t think the next thing to do is to go and be shutting gas pipeline or crude supply. This will also impact on contractual obligations between Dangote and the suppliers of these inputs. I don’t think they (PENGASSAN) need to go as far as that. I think there are better ways of resolving these disputes without creating a energy crisis for the country,” Dr. Yusuf said.
Although he agreed the suppliers can claim force majeure in the event that Dangote decides to take action against them for not supplying him the raw materials as agreed, Yusuf however said the Unions may have even committed an act of illegality.
“They may have committed an act of illegality by going as far as that. It is a disproportionate response from the union to Dangote. I’m not saying they cannot engage in a dispute but to go as far as that is disproportionate. It’s going to the extreme. Because if the company gets force majeure, losses must have been suffered on both sides. This is clearly a disruption inflicted by the union deliberately. So I’m not even sure whether that can qualify as force majeure. It can qualify as sabotage. That is what it’s going to look like,” Yusuf warned, adding that “there is need to interrogate the legality of even what they are doing because there are rules guiding labour actions. There are rules guiding the way you can also express your grievances, even as a union. I’m not sure that this particular step is covered in terms of what is legally permissible. You know, on that, you know, I doubt it and if it is found to be illegal, then there have to be consequences. We need to send a signal that nobody is above the law. I mean, you have the Ministry of Labour, you have the industrial courts. That is why they are there to resolve labour disputes. Of course, there is a major risk of disruption to petrol and fuel supply to the country because Dangote refinery is a major supplier of petrol and fuel. It’s a major supplier; it will disrupt the flow of supply of petrol and fuel and that will not be good for the country,” Dr. Yusuf, an economist, concluded.
Meanwhile, Dangote Refinery late yesterday has resumed which it announced its suspension on Friday.
The Chief Branding and Communications Officer, Dangote Group, Tony Chiejina, in a message to The Trust News.com, said the resumption followed the intervention of the Naira for Crude Technical Committee chairman.
The resumption of the sales in naira was contained in an email to its customers sighted by The Trust News.com yesterday night. The notice, signed by the Group Commercial Operations of Dangote Petroleum Refinery and Petrochemicals, was titled ‘Resumption of DPRP PMS Naira Sales”, read: “Following the intervention of the Naira for Crude Technical Committee chairman, we are pleased to inform you of the resumption of the supply of PMS sales in naira commencing immediately. You may kindly proceed to place your orders in naira for both self collection and free delivery of PMS to the earlier advised locations across the country.”