The Federal High Court (FHC or “the Court”) Abuja Division has delivered judgment in the case between IHS Nigeria Limited (IHS) and INT Towers Limited (INT) (collectively referred to as herein “the Plaintiffs”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA or “the Defendant”).

The judgment affirmed the NMDPRA’s authority to enact regulations pertaining to the administration of midstream and downstream petroleum liquids operations, and its prerogative to prescribe additional activities to be undertaken pursuant to a licence or permit, in line with Sections 125(3) and 174 (3) of the Petroleum Industry Act 2021 (PIA).

Furthermore, the Court determined that the Regulations set forth by the NMDPRA do not contradict Sections 47(2)(c) and 52(7)(a) of the PIA which provide for the imposition of levies for the Authority Fund and the Midstream and Downstream Gas Infrastructure Fund (MDGIF) on wholesale customers1.

Facts of the case

The Plaintiffs are affiliate companies licensed by the Nigerian Communications Commission (NCC) to provide telecommunications infrastructure services to telecommunications companies. The nature of their business requires near 100% consistency in power supply. The plaintiffs rely on Automotive Gas Oil (AGO) as the primary source of energy to power their extensive Base Transceiver Stations (BTS) and other site locations across Nigeria. Given the substantial amount of AGO required to power these stations, the Plaintiffs obtained Petroleum Products Import Permits from the NMDPR to facilitate the importation of petroleum products into Nigeria. While IHS entered into a Throughput and Service Agreement with Chisco Limited for exclusive use of its tank farm in Apapa, Lagos, INT owns and operates its storage tank facility in Delta State having secured storage licences from the NMDPRA. The Plaintiffs store the imported AGO in the tank farms before it is distributed to the respective BTS for use.

In June 2023, the NMDPRA notified licence holders for bulk storage facilities in Apapa (where the Chisco tank farm is situated), via email, that loading programs submitted to the NMDPRA must include ex-depot price, among other requisite information. The Plaintiffs submitted their loading programmes but did not include an ex-depot price as they do not resell the AGO but only utilize it for their operational activities. The NMDPRA initially refused to approve the Plaintiffs’ loading programs citing the absence of an ex-depot price but later approved same.

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1 The Midstream & Downstream Petroleum Operations Regulations, 2023 (“Operations Regulations”) defines wholesale customers as “a class of customers with respect to (a) natural gas, the right to contract for and purchase a supply of wholesale gas, with capability to connect individually and economically to a transportation pipeline or transportation network and shall include gas distributors, and (b) crude oil or petroleum products, a purchaser with annual capacity of 500 litres or its equivalent and above.