Otedola warns DAPPMAN: Dangote Refinery will upend old fuel model
When Femi Otedola, billionaire businessman and founder of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) warned that his own association’s model was “crumbling” against the Dangote Refinery, the stakes of Nigeria’s fuel market were suddenly crystal clear.
The opinion, printed on September 22, 2025, singled out Aliko Dangote, the refinery’s owner, and the long‑standing monopoly of the Nigeria National Petroleum Corporation (NNPC) as the old guard that could be left behind.
Background: DAPPMAN’s Rise and the Dawn of Domestic Refining
Back in 2002, Otedola launched DAPPMAN to give independent depot owners a fair platform in a market riddled with inefficiencies. At that time, depots were the missing link between NNPC’s supply chain and the countless petrol stations scattered across the country. The association grew into a powerful lobby, leveraging subsidies and pro‑form invoices – a system that, as Otedola now admits, fed “complacent importers” who chased arbitrage margins.
Fast forward to today, Nigeria boasts over 4 million metric tons of storage capacity, yet most of that space sits idle. The shift began when the government finally backed a truly local refining capacity, culminating in the launch of the $20 billion Dangote Refinery in Lagos. The old depot‑centric model, once a necessity, is now a relic.
The Dangote Refinery Disruption
Dangote’s plant, with a daily output of 650,000 barrels of gasoline, diesel and kerosene, has rewired the distribution network. Otedola highlighted the refinery’s fleet of 8,000 eco‑friendly trucks, a logistics chain that cuts transit time by half and slashes carbon emissions. Even seasoned players in Europe are shrinking depot footprints, turning many into bonded warehouses or shutting them down entirely – a trend Nigeria is now mirroring.
“With the refinery now supplying fuel locally, the old business model is crumbling,” Otedola wrote. He even advised some depot owners last year to consider selling their assets as scrap while there was still residual value. The warning is stark: cling to the past and risk bankruptcy.
Points of Contention: Pricing, Supply and Subsidy Allegations
DAPPMAN has accused the refinery of preferential pricing, claiming that certain buyers enjoy rates that undercut the market, allegedly creating a N1.5 trillion subsidy demand. The association argues that the refinery’s pricing strategy is opaque and harms consumers. In response, the Coalition of Refineries and Allied Companies of Nigeria (CORAN) urged calm and collaboration, emphasizing that price fairness is essential for consumer welfare.
The dispute echoes an earlier clash between Dangote and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), where disagreements over market structure and supply contracts also surfaced. This time, the battle is not just about prices but about who controls the future of the nation’s fuel supply.
Stakeholder Reactions and Industry Opinions
- Aliko Dangote – Stays silent publicly, but insiders say he views the refinery as a catalyst for self‑sufficiency.
- Femi Otedola – Calls for DAPPMAN members to either sell, restructure, or invest in new value chains, even suggesting a joint purchase of the Port Harcourt Refinery.
- Consumer groups – Fear fuel queues, especially after a warning on September 29, 2025, that tensions could ripple into supply disruptions.
- Industry analysts – Note that the refinery is on track to become a $100 billion enterprise within the next five to ten years, reshaping the entire downstream sector.
While Otedola praises Dangote’s vision, an editorial note in the same newspaper cautioned against celebrating a “retirement to Monaco,” arguing that continued effort from entrepreneurs like Dangote is what drives job creation across Africa.
What Lies Ahead: Potential Impact on Nigeria’s Fuel Landscape
The immediate implication is a possible re‑allocation of the idle storage capacity. Experts predict that the 4 million‑tonne warehouses could be repurposed as bonded storage for refined products, feeding a more transparent supply chain. If DAPPMAN adapts, it could transition from a depot‑focused body to a facilitator of logistics services, leveraging its network of dealers for last‑mile distribution.
Conversely, resistance could spark a wave of bankruptcies, consolidating market power in the hands of large refiners and a few multinational traders. The competition authority has already hinted at reviewing the pricing disputes for potential violations of Nigeria’s competition law.
In the longer term, the shift may accelerate Nigeria’s move toward energy independence, reducing reliance on imported gasoline and the associated foreign‑exchange outflows. The ripple effect could also spur ancillary industries – from truck manufacturing to renewable‑energy storage – as the country re‑tools its downstream ecosystem.
Frequently Asked Questions
Why is the Dangote Refinery considered a threat to DAPPMAN?
The refinery supplies fuel directly to retailers using its own fleet, bypassing the depot network that DAPPMAN members rely on. This cuts out middlemen, reduces margins and renders many idle storage facilities obsolete.
What are the main accusations DAPPMAN has made against the refinery?
DAPPMAN alleges that Dangote Refinery offers preferential pricing to select buyers, creating a hidden subsidy estimated at N1.5 trillion and harming competition and consumer welfare.
How much idle storage capacity does Nigeria have?
Industry data cited by Otedola indicates over 4 million metric tons of storage capacity sits idle, a legacy of the pre‑refining era that could be repurposed for bonded storage of refined products.
What could happen if DAPPMAN does not adapt?
Analysts warn of a wave of bankruptcies among depot owners, a further concentration of market power in large refineries, and possible fuel shortages if the dispute escalates into supply disruptions.
What role does the Competition Commission play in this dispute?
The commission is monitoring pricing practices for potential violations of Nigeria’s competition law, and may intervene if evidence shows the refinery is abusing market dominance to the detriment of consumers.
- Sep 30, 2025
- SIYABONGA SOKHELA
- 15 Comments
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fatima blakemore
September 30, 2025 AT 20:53Wow the fuel game is shifting faster than Lagos traffic at rush hour.
Otedola’s call out feels like a reality check for anyone still clinging to the old depot hustle.
It’s like watching a cassette tape get swapped for a streaming service – you either adapt or get left behind.
Hope the smaller players find a niche in the new logistics wave.
Himanshu Sanduja
October 3, 2025 AT 19:17I hear you and think many will need a crash course in modern supply chain.
Those who can’t pivot might just become footnotes in the next oil report.
Kiran Singh
October 6, 2025 AT 17:41Dangote’s trucks are the new superheroes on the road 🚚💨
Seeing local fuel roll out without the old middlemen hype gives me hope for more jobs and cleaner air.
Let’s cheer the shift while we keep an eye on fairness.
Balaji Srinivasan
October 9, 2025 AT 16:05True that the greener fleet is a win for the city.
But the transition will need careful regulation to avoid new bottlenecks.
Vibhor Jain
October 12, 2025 AT 14:29Great, now we just wait for the next monopoly to pop up.
Ashutosh Kumar Gupta
October 15, 2025 AT 12:53Honestly the whole “old guard vs new kid” narrative is getting overblown.
Many of these depot owners have been living off subsidies for decades and now they’re being tossed aside like yesterday’s news.
If the market truly wants efficiency, it will force a painful cleanse, but that’s the way capitalism rolls.
Anurag Narayan Rai
October 18, 2025 AT 11:17It’s fascinating how the energy sector mirrors every other industry undergoing digital disruption – think of how newspapers went from print to blogs and now to TikTok news bites.
First, the Dangote refinery represents a massive capital injection that changes supply dynamics, and that alone forces downstream players to reassess their value propositions.
Second, the logistics model that DAPPMAN championed for two decades was built on scarcity and the need for intermediaries to bridge the gap between NNPC and the pump.
When you eliminate that gap with a domestic refinery feeding fuel directly to retailers, the middle layer loses its purpose.
Third, the idle storage capacity of over four million metric tons is like a sleeping giant that can either be repurposed for bonded storage or become a rusting liability.
Fourth, the pricing controversy, while still under investigation, hints at a possible asymmetry where large refineries could leverage economies of scale to set lower prices that smaller depots can’t match.
Fifth, the regulatory environment will need to catch up, because the Competition Commission’s involvement could either level the playing field or stall innovation if it over‑regulates.
Sixth, from the perspective of employment, the shift could create new jobs in truck manufacturing, maintenance, and renewable‑energy storage, but it will also cut jobs for those tied to the old depot network.
Seventh, the consumer will ultimately feel the impact – either through lower pump prices and fewer queues, or through potential supply shocks if the transition is mismanaged.
Eighth, investors are watching closely; the refinery’s projected $100 billion valuation within a decade could attract more foreign capital into Nigeria’s downstream sector.
Ninth, the broader macroeconomic picture improves as foreign‑exchange outflows for imported gasoline reduce, strengthening the naira.
Tenth, the environmental angle is not negligible – fewer imports mean lower shipping emissions, and the eco‑friendly truck fleet cuts road emissions.
Eleventh, there is a cultural shift too; the old notion of “depot owners as gatekeepers” may give way to a more collaborative logistics ecosystem where multiple players share infrastructure.
Twelfth, technology adoption – digital tracking, real‑time inventory, and AI‑driven demand forecasting – becomes essential in the new model.
Thirteenth, the risk of monopolistic behavior by Dangote or any large refiner remains, which is why vigilant antitrust oversight is crucial.
Fourteenth, the transition period will likely see a wave of bankruptcies among smaller depots, a painful but perhaps necessary market correction.
Fifteenth, in the long run, a more self‑sufficient Nigeria could serve as a regional fuel hub, exporting to neighboring countries and boosting its geopolitical clout.
All these factors together suggest that the “crumbling” of the DAPPMAN model is less a tragedy and more an inevitable evolution toward a modern, efficient energy supply chain.
Sandhya Mohan
October 21, 2025 AT 09:41Sometimes change feels like a tidal wave you’re forced to surf rather than swim against.
It reminds me that every disruption carries a hidden lesson about resilience.
Prakash Dwivedi
October 24, 2025 AT 08:05The emotional weight of watching decades‑old businesses disappear is palpable.
Yet the narrative of progress demands that we acknowledge both loss and opportunity with equal clarity.
Rajbir Singh
October 27, 2025 AT 06:29Big refinery means less need for small depots.
People who can’t change may lose jobs.
Swetha Brungi
October 30, 2025 AT 04:53It’s a tough balance – on one hand, efficiency and lower prices benefit the nation; on the other, the human cost of restructuring can’t be ignored.
We should push for retraining programs and social safety nets to ease the transition.
ONE AGRI
November 2, 2025 AT 03:17From a patriotic standpoint, watching our own giant take on the fuel market fills me with pride and a wary caution.
India’s own industrial revolutions taught us that self‑sufficiency is a double‑edged sword – it can empower a nation but also concentrate power in ways that may sideline the common worker.
When we see Dangote’s refinery reshaping the distribution chain, it’s vital to ensure that the benefits trickle down to every Nigerian, not just the boardrooms.
The old depot owners have been the backbone of local economies for years, providing livelihoods in remote towns.
If they’re pushed out without a safety net, we risk creating pockets of poverty that could destabilize regions.
Therefore, the government must pair this industrial leap with robust policies – subsidies for retraining, incentives for small‑scale logistics firms, and transparent pricing oversight.
Only then can the “crumbling” of DAPPMAN become a constructive rebirth rather than a ruthless wipe‑out.
Hariprasath P
November 5, 2025 AT 01:41i get the vibe but honestly the narrative feels overhyped – sure the refinery is big but the real game changer will be how policy adapts.
Rashi Nirmaan
November 8, 2025 AT 00:05It is an undeniable fact that national assets must be protected from any form of corporate overreach.
Any preferential pricing by the refinery not only undermines market fairness but also threatens the sovereign economic agenda.
Therefore, immediate regulatory intervention is imperative.
vikash kumar
November 10, 2025 AT 22:29Indeed, a rigorous antitrust review should be instituted promptly to preserve competitive equilibrium and safeguard consumer interests.