Nigerian business magnate Femi Otedola has advised members of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) to adapt to changes in the downstream oil sector, particularly with regards to the operations of the Dangote Refinery. Otedola’s statement comes amid an ongoing dispute between DAPPMAN and the Dangote Refinery, which has led to the intervention of the Nigerian government.
The Dangote Refinery has commenced local fuel production, rendering the traditional model of fuel importation and depot-based arbitrage obsolete. Otedola, who founded DAPPMAN in 2002, noted that the association’s original purpose was to provide a platform for independent depot owners to compete with major marketers. However, with the commencement of local fuel production, the model has collapsed, leaving most of the country’s four million metric tons of storage capacity idle.
Otedola emphasized that the domestic supply of fuel has become efficient and reliable, making the need for large storage capacities redundant. He also dismissed claims that depots significantly drive employment, arguing that filling stations create more jobs for Nigerians. Furthermore, Otedola stated that insisting on the Dangote Refinery subsidizing DAPPMAN with N1.5 trillion would unnecessarily burden consumers.
The billionaire drew parallels with Nigeria’s experience in the cement industry, where local production led to the obsolescence of infrastructure built around imports. He urged depot owners to consider selling, restructuring, or investing in new value chains, suggesting that they could acquire and operate the Port Harcourt Refinery if they truly believe in competition.
Otedola’s advice is significant, as it highlights the need for adaptation in the downstream oil sector. With the Dangote Refinery’s production capacity and the Nigerian government’s efforts to increase local fuel production, the role of depots in the industry is evolving. As Otedola noted, refusing to adapt to these changes may lead to irrelevance and bankruptcy for DAPPMAN members. Instead, they should focus on creating sustainable value and embracing the new era of self-sufficiency and transparency in the industry.
