Why depot owners risk bankruptcy

Femi Otedola, billionaire businessman and chairman of Geregu Power Plc, has advised members of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) to focus on owning and scaling last-mile retail outlets, rather than holding on to tanks built for a fuel import economy that no longer serves the country.

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Mr Otedola disclosed this in a statement on Sunday, expressing strong support for Aliko Dangote, founder and president/chief executive of the Dangote Group, in his dispute with DAPPMAN.

He cited examples of depots in Amsterdam and Houston, which were designed to serve export markets, particularly in Africa.

However, he said with Nigeria now refining fuel locally, such infrastructure is becoming increasingly unnecessary.

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Mr Otedola warned that if DAPPMAN members fail to adapt, they will not only become irrelevant but may go bankrupt.

“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. If DAPPMAN members do not adapt, they will not only become irrelevant, they may go bankrupt,” Mr Otedola said.

He said DAPPMAN should consider selling, restructuring, or investing in new value chains, adding that if they truly believe in competition, they could even come together and acquire the Port Harcourt Refinery and see if they can succeed where the Nigerian National Petroleum Company Limited (NNPC Ltd) could not.

READ ALSO: Otedola backs Dangote in battle with DAPPMAN

He added that in developed markets, refinery operators are downsizing their depot footprint, with many converting depots into bonded warehouses or exiting the business entirely.

“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 We must stop clinging to outdated privileges and focus on a new era built on self-sufficiency, transparency, and sustainable value creation,” he said.