Oil marketers push back Otedola’s call on depot owners to change business

Oil marketers on Tuesday pushed back billionaire businessman Femi Otedola’s criticism of petroleum depot businesses.

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The oil marketers, through the national president, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, faulted Mr Otedola’s advice to depot owners to scale last-mile retail outlets, rather than holding on to tanks built for a fuel import economy that no longer serves the country.

Mr Gillis-Harry noted that Mr Otedola’s suggestion to members of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) was to “scrap” their depots, a call the PETROAN president described as insensitive to the struggles of businessmen.

“Otedola’s view on marketers innovating and restructuring is not a thoughtful statement,” Mr Gillis-Harry said in an interview on Channels Television on Tuesday. He asked whether Mr Otedola was suggesting that all the investments made in the sector should simply be wasted.

In a statement on Sunday, Mr Otedola criticised the depot owners’ business model which he said could land them in bankruptcy.

He said this, expressing strong support for Aliko Dangote, founder and president/chief executive of the Dangote Group, in his dispute with DAPPMAN. DAPPMAN had criticised Dangote for bypassing traditional depots in supply petrol from his refinery to the Nigerian market, arguing that direct supply could threaten their investments.

However, Mr Otedola said with Nigeria now refining fuel locally, such infrastructure was becoming increasingly unnecessary.

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

“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 could succeed where the Nigerian National Petroleum Company Limited (NNPC Ltd) could not.

But Mr Gillis-Harry said on Tuesday that while innovation brought new developments and phased out old practices, certain structures would remain relevant.

He said Mr Otedola’s views were debatable, given his experience as a former DAPPMAN member and the effort it took him to invest in that area.

“Unlike him, many others have not been able to move as quickly. Advising others to abandon their investments is a matter he should consider carefully before offering such guidance,” Mr Gillis-Harry said.

He added that DAPPMAN’s facilities are spread across Nigeria, including Port Harcourt, Calabar, Oghara, and Lagos to ease product distribution.

READ ALSO: Otedola backs Dangote in battle with DAPPMAN

He said although DAPPMAN’s leadership can speak for themselves, “it would be unwise for Nigerians who have invested heavily to scrap their ventures.”

Dangote trucks alone won’t solve product distribution challenges

Also, the PETROAN president said Dangote Refinery’s newly launched CNG-powered trucks would not be enough to ensure effective distribution of petroleum products across Nigeria.

He said the investments of oil marketers in the downstream sector should not be ignored. “All we are asking for is inclusion, because there is no way Dangote’s trucks will be enough to supply products” to the nooks and crannies of the country, Mr Gillis-Harry noted.

He said oil marketers were also investing in CNG trucks like Dangote. He said all they want “is to ensure seamless and effective supplies to even areas where Dangote’s trucks cannot reach.”