Otedola Urges Nigerian Fuel Marketers to Embrace Innovation Amidst Dangote Refinery's Impact
Prominent Nigerian businessman and philanthropist Femi Otedola has weighed in on the evolving dynamics of Nigeria's fuel supply sector, specifically addressing the ongoing discussions between the Dangote Refinery and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN). Otedola is advocating for innovation and adaptation within DAPPMAN, suggesting that failure to evolve could lead to obsolescence.
Otedola expressed admiration for Aliko Dangote's achievements with the Dangote Refinery, calling it a landmark achievement for Nigeria's energy independence and future economic prospects. He believes the refinery's operations represent a significant shift in the downstream sector, rendering older business models unsustainable.
A Call for Change and Adaptation
Otedola highlighted the persistent presence of groups resistant to change, but emphasized that history demonstrates that change can only be delayed, not prevented. Drawing on his own experience, Otedola recounted founding DAPPMAN 23 years ago with the goal of challenging the dominance of major marketers and providing a fair platform for independent depot owners. At the time, depot ownership was crucial for filling critical supply gaps in an inefficient system.
However, Otedola argues that the landscape has drastically changed. Many original players have left the industry, and those remaining are holding onto assets that no longer reflect current market realities. He revealed that he had previously advised some depot owners to consider selling their facilities for scrap value, as Nigeria now possesses over 4 million metric tons of storage capacity, much of which remains unused. With the Dangote Refinery now supplying fuel locally, the traditional business model is collapsing.
The Dangote Refinery: A Game Changer
Otedola emphasized that the Dangote Refinery has transformed the logistics chain by acquiring 8,000 brand new, eco-friendly CNG trucks for nationwide distribution, reducing pollution and breakdowns compared to older vehicles. He underscored his deep understanding of the fuel business, having been a major player himself.
He questioned DAPPMAN's current objectives, asking whether they are striving to preserve a model based on fuel imports, subsidy exploitation, and outdated infrastructure. Otedola asserts that this era is rapidly disappearing. He explained that the establishment of depots was primarily for obtaining Pro Forma Invoices (PFIs) from the NNPC, the sole gasoline supplier at the time, leading to complacency and a focus on arbitrage and subsidy margins.
Otedola argued that with the elimination of PFIs, there is no justification for the Dangote Refinery to subsidize DAPPMAN with a requested N1.5 trillion, which would ultimately be passed on to consumers.
Rethinking the Role of Depots
Otedola challenged the notion that depots are significant job creators, stating that a typical depot employs a minimal number of people, including security personnel. In contrast, a single filling station can provide employment to numerous individuals. He urged DAPPMAN members to focus on owning and expanding last-mile retail outlets instead of clinging to storage tanks designed for a fuel import economy that is no longer relevant.
Drawing parallels to global trends, Otedola pointed out that depots in major trading hubs like Amsterdam and Houston primarily serve export markets. With Nigeria now refining fuel locally, such infrastructure is becoming increasingly obsolete. He cited the example of the cement industry, where bulk carriers became redundant once Nigeria began producing cement locally.
Adapt or Perish: A Stark Warning
Otedola warned that if DAPPMAN members fail to adapt, they risk becoming irrelevant and potentially bankrupt. He urged them to consider selling, restructuring, or investing in new value chains. He suggested that if they believe in competition, they could collectively acquire the Port Harcourt Refinery and attempt to succeed where the NNPC has struggled.
He also cited the example of the Folawiyo Group, which strategically sold its depot early on. Otedola believes that DAPPMAN's relevance is diminishing and that the focus should shift towards self-sufficiency, transparency, and sustainable value creation. He stated unequivocally that the Dangote Refinery is not the problem, but rather the solution.
Praising Deregulation and Looking Ahead
Otedola commended President Bola Tinubu for his bold move to fully deregulate the downstream petroleum sector, a step that previous leaders had avoided. This deregulation, he believes, has broken the hold of entrenched interests and ushered in an era of transparency, healthy competition, and customer-centric service. It marks a decisive break from a past plagued by rent-seeking, subsidy fraud, product diversion, and smuggling, paving the way for a more efficient and accountable energy market.
Otedola recalled how significant sums were misappropriated through fraudulent fuel subsidy claims during the Goodluck Jonathan administration, alleging that he had warned the former President about corrupt oil marketers at the time. He reiterated that these fraudulent claims were linked to depot licenses, a policy that incentivized rent-seeking and corruption rather than transparency and innovation.
Finally, Otedola humorously congratulated Aliko Dangote on his achievements, suggesting that he could now "go to Monaco and rest."
No comments:
Post a Comment