In a recent interview on TVC, DAPPMAN's Executive Secretary, Olufemi Adewole, addressed the ongoing discussions surrounding vested interests in the fuel distribution network. While dismissing outright claims of a "cabal," Adewole acknowledged the significant investments made by private depot owners over the years to ensure a consistent fuel supply to Nigerians and their legitimate expectation of returns on those investments.
"There is no cabal in the midstream and downstream operations as far as I am concerned... But I can tell you that we have vested interests," Adewole stated. "My principals have vested interests in the sector. So if they have invested over these years, billions of Naira... Definitely, they should have commensurate returns on their investment."
Adewole's comments come in the wake of assertions by the President of the Dangote Group, Aliko Dangote, who recently declared that his $20 billion refinery is still "fighting for survival" against entrenched interests and oil sector cabals allegedly resisting local refining efforts. Dangote claimed that these entities, who have historically benefited from government-subsidized fuel imports, are attempting to sabotage his 650,000 barrels per day refinery in Lekki, Lagos.
However, Adewole countered this narrative by pointing out that the Dangote Refinery, despite its large capacity, is currently unable to meet even the reduced local fuel consumption demands. He emphasized that private depot owners continue to shoulder the primary responsibility for fuel distribution across the nation.
"Quoting the authority’s chief executive in his recent presentation at the Villa, he stated that Dangote Refinery is not meeting up to even the reduced local consumption volume," Adewole noted. "So, for now, Dangote Refinery cannot meet up. It is we, the private depot owners, that have been bridging the gap and meeting the needs of Nigerians."
He argued that an immediate cessation of fuel importation would be "chaotic" and "dangerous," advocating for a phased approach contingent on multiple domestic refineries becoming operational.
Adewole then turned his attention to the "clear and present danger" of a potential monopoly, highlighting the significant influence Dangote Refinery's scale could exert over pricing and supply chains.
"The concerns of possible monopoly in the downstream of the petroleum sector are what we can term as a clear and present danger," Adewole warned. "Its price, volume and capacity alone give the refinery the edge over all others. It can manipulate prices. It can dictate prices. It can get what it wants. So it’s a clear and present danger for us, and we would rather not have it that way."
He commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for its efforts in maintaining market integrity under the Petroleum Industry Act (PIA), which aims for a free market with multiple players. However, he expressed concern over Dangote Refinery's recent legal action against the authority.
"You will recall that Dangote recently took the Nigerian Midstream Downstream Petroleum Regulatory Authority and a few other marketers to court. This tells you their mindset, and what they were challenging is actually the authority of the regulator... to release import licenses for marketers to import fuel. So it gives you a picture into their mindset," Adewole explained.
He further alleged that DAPPMAN members are not receiving equitable opportunities to purchase products directly from the Dangote Refinery, claiming a preference for sales to select marketers via gantry supplies rather than bulk depot loading.
"Dangote Refinery prefers a selective approach... access to load vessels is restricted," Adewole stated, highlighting the challenges faced by depot owners with infrastructure in coastal cities.
He also revealed that instances of price reductions after marketers have loaded products at the gantry have resulted in financial losses for many, who have absorbed these costs to maintain operations.
Addressing the final pump price of fuel, Adewole detailed the various cost layers involved, from crude oil prices and refinery margins to logistics and retail expenses, also pointing to the impact of operational inefficiencies and high financing costs.
"Depot operations are tough. Equipment is ageing, and capital costs are high. To import 20,000 metric tons, a marketer needs an exposure of over N20 billion. Most of this is bank-funded at high interest rates," Adewole concluded, painting a picture of a complex and potentially precarious downstream sector grappling with the emergence of a dominant player.