Several Liquefied Petroleum Gas (LPG) plants in Nigeria have remained shut for over eight weeks due to regulatory concerns over unusually high levels of propane detected in LPG supplied to some facilities. The operators of these plants have accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of making them "scapegoats" in a widening dispute involving the Dangote Petroleum Refinery. The affected operators have expressed concerns about the financial implications of the shutdown, including struggles to repay loans, pay workers, and meet other financial obligations.
The dispute centers on the alleged supply of high-propane LPG from Sublime Oil and Gas Limited, a major off-taker from Dangote Refinery. Sources familiar with the matter have identified Sublime Oil and Gas Limited as the source of the propane supplied to the affected LPG plants. The product became the subject of regulatory scrutiny after tests reportedly detected propane levels above the permitted threshold. The operators have questioned why the depot they identified as the source of the high-propane product has continued operating while the downstream facilities that received the product have faced prolonged shutdowns.
A senior NMDPRA source has confirmed that the regulator received reports of possible propane adulteration in the market and commenced investigations. The official said NMDPRA tested LPG at different outlets and found unusually high propane content. The investigation led NMDPRA to identify producers involved in the supply chain and ask them to stop loading propane while the probe continued. However, the official cautioned against concluding that the producer was necessarily responsible for the alleged adulteration.
The regulatory dispute between NMDPRA and Dangote Refinery is currently before the Federal High Court in Lagos. NMDPRA has raised concerns over the composition, distribution, and handling of propane supplied from the Dangote refinery. Laboratory tests conducted on samples from three LPG plants allegedly showed propane content above 50%, exceeding the industry requirement of 20%. The regulator has also alleged discrepancies in propane truck-out records, including unaccounted consignments.
Dangote Refinery has challenged NMDPRA's regulatory action in court, and an interim order has been issued restraining NMDPRA from interfering with the refinery's operations. NMDPRA has urged the court to discharge the interim order, arguing that it was obtained through misrepresentation and suppression of material facts. The dispute has raised safety concerns, as the alleged diversion of propane to unauthorized or unlicensed customers could lead to LPG blending outside approved specifications.
The shutdown of LPG plants has significant implications for the Nigerian market, as LPG is a widely used cooking fuel. The operators have expressed concerns about the impact on their businesses and employees, as well as the potential for job losses. The dispute highlights the need for effective regulation and monitoring of the LPG supply chain to ensure safety and compliance with industry standards.
The NMDPRA's investigation and regulatory actions have sparked a heated debate about the role of regulatory agencies in ensuring safety and compliance in the oil and gas industry. The outcome of the court case and the resolution of the dispute will have far-reaching implications for the industry and the country's energy sector. Key stakeholders are watching closely as the situation unfolds.
Key points
- Several LPG plants in Nigeria have been shut down due to regulatory concerns over high propane levels.
- The dispute centers on the alleged supply of high-propane LPG from Sublime Oil and Gas Limited, a major off-taker from Dangote Refinery.
- The regulatory dispute between NMDPRA and Dangote Refinery is currently before the Federal High Court in Lagos.
