Depot owners across Nigeria are increasingly uneasy over mounting investment uncertainty and the prospect of job losses as the country's expanding local refining capacity steadily displaces the long-dominant fuel importation model.
Industry observers say depot operators--whose businesses were historically built around the storage and distribution of imported petroleum products--are now grappling with shrinking relevance as domestic refining gathers momentum, led by the multi-billion-dollar Dangote Refinery.
There are growing fears that many depot operators could be gasping for survival, as large-scale product storage, once the backbone of downstream operations, rapidly gives way to a new supply chain structure anchored on local refining.
Observers told Daily Trust that the emergence of the 650,000 barrels-per-day Dangote Refinery represents the single biggest disruption to depot businesses and petroleum product importation in Nigeria's history, triggering price competition and eroding the margins that once sustained depot operators.
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As of early last year, Nigeria's total operational refining capacity stood at about 974,500 barrels per day (bpd), with Dangote Refinery accounting for nearly 67 per cent of that figure, alongside rehabilitated state-owned refineries and several modular plants.
Dangote Refinery alone supplies between 50 million and 53 million litres of petrol daily to the domestic market, significantly reducing dependence on imported fuel.
Despite this progress, petrol importation still accounted for about 62.47 per cent of Nigeria's total Premium Motor Spirit (PMS) consumption in 2025, though industry players say that figure is falling rapidly.
The Crude Oil Refiners Association of Nigeria (CORAN) has repeatedly insisted that its members possess the capacity to meet national fuel demand without resorting to imports, while the Independent Petroleum Marketers Association of Nigeria (IPMAN) has also intensified its opposition to fuel importation.
Early warning
Last year, billionaire businessman and Chairman of Geregu Power Plc, Mr. Femi Otedola, issued a blunt warning to members of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), urging them to pivot away from storage infrastructure designed for a fuel import economy.
Otedola advised depot owners to focus instead on retail outlets and last-mile distribution, arguing that large fuel tanks built to service importation are increasingly redundant in a local-refining era.
"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," he said.
"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."
He suggested that DAPPMAN members should consider selling, restructuring or investing in new value chains, adding that they could even jointly acquire the Port Harcourt Refinery if they truly believe in competition.
Otedola also pointed to global trends where refinery operators are downsizing depot footprints, converting facilities into bonded warehouses or exiting the business entirely.
"Folawiyo Group, known for its foresight and integrity, sold its depot and exited early. That is strategic thinking," he noted.
"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."
Trepidation
A source close to depot operators told Daily Trust that the current business environment has become increasingly challenging.
"It is a statement of fact that if this situation continues, many depot operators may have to shut down and seek alternative businesses," the source said.
"An average depot owner will have little to do if marketers are loading directly from Dangote Refinery. What happens to the staff? Trucking and vessel receipt require significant human and material resources, which may no longer be necessary if depots are bypassed."
According to the source, the situation has been worsened by the non-issuance of petrol import permits, further squeezing depot utilisation.
Efforts to obtain comments from DAPPMAN spokesman, Olufemi Adewole, were unsuccessful, as calls and messages went unanswered.
The pain and the changes
Industry observers describe the rise of Dangote Refinery as a structural disruption rather than a temporary shock.
For decades, DAPPMAN members built businesses around importation--vessel chartering, foreign exchange exposure, depot storage and margins on imported PMS and AGO. That model, analysts say, is now under intense pressure as domestic supply expands aggressively.
"Yes, downsizing risks are real in the short term, especially in import logistics, shipping agency services and under-utilised depots," an industry source told Daily Trust.
"As imports fall, some assets and roles will inevitably be affected. But this is a necessary correction. Nigeria cannot continue bleeding foreign exchange on fuel imports when domestic refining capacity is finally coming on stream."
Observers insist that what depot owners are confronting is not a cyclical downturn but a structural market transition driven by domestic refining scale, cost competitiveness and logistics reconfiguration.
"Many depots were built around an import-dependent model sustained by regulatory protection and policy distortions. That business model is now largely obsolete," another source noted.
"Markets are dynamic and guided by fundamentals. What we are seeing is not market failure, but a delayed market correction."
Reorientation to the Rescue
Professor Wumi Iledare, a petroleum economist, said depot owners' survival lies in reorientation rather than resistance.
He advised operators to transition from import storage to domestic product logistics, regional distribution, blending services and strategic petroleum product storage.
"Using existing depots to hold locally refined products for energy security is both practical and economically sound," he said.
"Some consolidation and asset repurposing is inevitable. Downsizing is not the problem; failure to adapt is. In the long run, a domestically anchored downstream market will be more efficient, resilient and sustainable."
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Energy affairs commentator Kunle Odusola also urged DAPPMAN members to reposition as strong local distributors through direct lifting from Dangote Refinery, trucking, retail networks and last-mile logistics.
"Depots don't have to die," he said. "They can be converted into storage hubs for locally refined products, LPG or CNG facilities, blending stations or evacuation points. Policy support will be critical."
Odusola further advised depot owners to diversify into gas, lubricants, petrochemicals and even electric vehicle infrastructure, noting that Nigeria's Decade of Gas presents significant opportunities.
Chief Executive Officer of Komotek Enterprises, Mr. Rasheed Adeleke, echoed similar views, stressing that adaptability will determine depot owners' relevance going forward.
"The industry dynamics have changed," he said. "Those who adopt the new normal will survive and remain relevant. Those who cling to the old import model may struggle."
As Nigeria's downstream sector undergoes a major reset, stakeholders agree that while the transition may be painful, the long-term benefits which are enhanced energy security, forex savings and a more resilient economy far outweigh the short-term disruptions.
In the words of one analyst: "This is not the end of the downstream sector. It is a reset. Those who adapt quickly will not only survive, they will grow."
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