Femi Otedola, billionaire businessman, says the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) needs to evolve a new business model as depots are going out of fashion.
In a statement issued on Monday, Otedola also praised
President Bola Tinubu for having the courage to deregulate the downstream
sector.
“Nigeria now has over 4 million metric tons of storage
capacity, most of it idle. With the Dangote Refinery now supplying fuel
locally, the old business model is crumbling,” he said.
THE FULL STATEMENT
Congratulations to my dear brother, Aliko Dangote, on the
success achieved so far since the Dangote Refinery commenced operations. It is
a historic leap for Nigeria’s energy independence and economic future.
But more importantly, credit must go to President Bola Ahmed
Tinubu for doing what no other leader before him had the political will to
execute, the full deregulation of the downstream petroleum sector. This
singular act has broken the grip of entrenched interests and ushered in a new
era of transparency, healthy competition, and customer-centric service
delivery. In a sector long plagued by rent-seeking, subsidy fraud, product
diversion, and smuggling, this reform marks a decisive break from the past and
lays the foundation for a more efficient and accountable energy market.
Yet despite this progress, there are still voices clinging
to the old ways. Voices determined to resist change, even when it’s clear the
tide has turned.
I’ve followed recent commentary around fuel supply issues
and feel compelled to provide some perspective, especially as it relates to the
future of this country, which remains threatened by entrenched cabals who still
believe they can block the winds of reform.
But history has shown time and again: you can delay change,
frustrate it, even sabotage it but you can never stop it. I founded DAPPMAN in
2002 (23 years ago) with a clear mission, to challenge the dominance of the
major marketers and give independent depot owners a fair platform to thrive.
I personally structured the group, appointing the late
George Enenmoh, then MD of Ascon Oil, as Chairman, while I served as Vice
Chairman and Sayyu Dantata as Secretary. At the time, depot ownership was
strategic. We were filling critical supply gaps left by an inefficient system.
But times have changed. Many of the original players have
exited the scene, and those left are clinging to assets that no longer reflect
today’s business realities. I advised some of them as far back as last year to
sell their depots as scrap while they still had value. Nigeria now has over 4
million metric tons of storage capacity, most of it idle. With the Dangote
Refinery now supplying fuel locally, the old business model is crumbling.
Zenon Oil pioneered the modern diesel business in Nigeria
and grew to become the largest supplier in the country. We built depots to
store our imported diesel because the market was import-driven and riddled with
inefficiencies. But with Dangote’s refinery fully operational, those gaps no
longer exist. We now have domestic production and local supply efficient,
reliable, and proudly Nigerian. Furthermore, we must not fail to recognise the
attendant benefits of eliminating the grid lock around the Ibafon , Tincan and
Apapa areas due to the operations of the Dangote Refinery.
More than just producing fuel, Aliko has elevated the entire
logistics chain. He has purchased 8,000 brand new CNG eco-friendly trucks that
will distribute across the country with less pollution and fewer breakdowns,
unlike the aging, rickety trucks still used by some operators. I know this
business intimately. I was king of it and at the peak of it in 2005 (20 years
ago) , I was conferred with the life patron of the PTD (Petrol Tanker Drivers)
union by Mr Akinlaja. So, when I say the game has changed, I speak from deep
experience.
What is DAPPMAN fighting for today? To preserve a model
built on fuel imports, subsidy exploitation, and outdated infrastructure? That
era is fast disappearing. The setting up of depots was mainly to collect PFIs.
No depots, No PFIs from NNPC who were sole suppliers of gasoline at the time
and which thus led to the breeding of complacent importers whose sole agenda
was on arbitrage and subsidy margins. Since PFI is gone, I see no reason why
Dangote Refinery should subsidize DAPPMAN with N1.5 trillion which they are
asking Dangote Refinery to pay and subsequently pass this cost to consumers. I
salute the courage of my brother Aliko Dangote, like Amazon Incorporated in
bringing about transformative change in the downstream sector.
On subsidy, I personally warned President Goodluck Jonathan
that he was being misled. The system was built to benefit depot owners, and
DAPPMAN members became the primary beneficiaries. Over ₦2 trillion was siphoned
through questionable claims, all tied to depot licenses. The policy rewarded
neither transparency nor innovation, it encouraged rent-seeking and corruption.
Let’s also address a myth that continues to be repeated.
Depots do not drive employment as some claim. A typical depot employs perhaps
five people, gatekeeper included. In contrast, a single filling station can
provide jobs to dozens of Nigerians—from pump attendants to cashiers, security
personnel, and cleaners.
If anything, DAPPMAN members should be focusing on owning
and scaling last-mile retail outlets, not holding on to tanks built for a fuel
import economy that no longer serves us.
The global picture is instructive. Depots in Amsterdam or
Houston were designed to serve export markets, especially Africa. With Nigeria
now refining locally, such infrastructure is increasingly unnecessary. The same
thing happened in the cement industry. Once Nigeria started producing cement
locally, the bulk carriers that used to dock at our ports were retired, many
sold as scrap. The same outcome awaits fuel depots.
If DAPPMAN members do not adapt, they will not only become
irrelevant, they may go bankrupt. Instead of resisting progress, they should
consider selling, restructuring, or investing in new value chains. In fact, if they
truly believe in competition, they could even come together and acquire the
Port Harcourt Refinery and see if they can succeed where NNPC could not.
Even in developed markets, refinery operators are downsizing
their depot footprint. Many are converting them into bonded warehouses or
exiting completely. Folawiyo Group, known for its foresight and integrity, sold
its depot and exited early. That is strategic thinking.
DAPPMAN had its place but today, its relevance is fast
fading. We must stop clinging to outdated privileges and focus on a new era
built on self-sufficiency, transparency, and sustainable value creation.
Dangote Refinery is not the problem. It is the solution.
Let’s move forward.
Africans are proud of you. And yes, my dear brother Aliko,
you can now go to Monaco and rest jejely like me. You’ve earned it.
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