Nigeria’s oil subsidy regime has for years been shrouded in secrecy, controversy, and tales of staggering corruption. While the ordinary Nigerian has often borne the brunt of rising fuel costs, chronic scarcity, and the cascading effects of subsidy mismanagement, the inner workings of the system have remained largely hidden from public scrutiny. Now, billionaire businessman Femi Otedola has opened a window into how the policy allegedly became a conduit for unprecedented theft, revealing that more than N2 trillion was siphoned through questionable subsidy claims during the administration of former President Goodluck Jonathan, with depot licences serving as the key channels for abuse. His revelations, made against the backdrop of a simmering dispute between the Dangote Petroleum Refinery and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), provide not just an insight into past abuses but also a warning about the entrenched interests fighting to preserve a broken system.
At the heart of this unfolding drama lies the ongoing battle for dominance in Nigeria’s downstream oil sector. Dangote’s new refinery, touted as a game-changer for Africa’s largest economy, recently slashed its petrol prices, triggering outrage from depot owners who accused it of market disruption. In a statement on September 16, the association alleged that the refinery’s pricing strategy was designed not to serve national interest but to cripple competition. Dangote Refinery responded by accusing the depot owners of making demands for an annual subsidy of N1.5 trillion in order to sustain artificially inflated prices at their depots.
Into this contentious debate stepped Otedola, the chairman of Geregu Power and one of Nigeria’s most prominent business figures, who offered his perspective not just as a player in the sector but also as a witness to the inner machinations of the subsidy era. Otedola claimed that far from being genuine players in the energy supply chain, depot owners deliberately structured the system to enrich themselves at the expense of the Nigerian state and its people. He disclosed that during Jonathan’s presidency, he personally warned that the subsidy architecture was being manipulated and designed in ways that rewarded corruption, opacity, and rent-seeking rather than innovation or efficiency.
“On subsidy, I personally warned President Goodluck Jonathan that he was being misled,” Otedola recalled. According to him, the scheme was deliberately built to benefit depot owners, who quickly became its main beneficiaries. “Over N2 trillion was siphoned through questionable claims all tied to depot licences. The policy rewarded neither transparency nor innovation, it encouraged rent seeking and corruption.” His words cut to the core of what many Nigerians had long suspected: that the subsidy regime was less about protecting citizens from high pump prices and more about enriching a small clique of well-connected businessmen.
The allegations shed new light on the use of depot licences, which were originally intended to regulate petroleum product distribution but allegedly became the backbone of subsidy racketeering. In practice, the licences granted depot owners disproportionate leverage in the system. Subsidy claims were often tied to documentation provided by depot operators, who certified the importation and distribution of fuel. Otedola suggested that this process was rife with falsification and inflation, allowing vast sums to be claimed for products that either never arrived or were imported in smaller quantities than declared. This created an environment where government funds meant to stabilize fuel prices for ordinary Nigerians were instead diverted into private pockets.
The billionaire also sought to dismantle what he described as the “myth” of depots as major contributors to employment. Contrary to public perception, he revealed that most depots employ fewer than five people, including the gatekeeper. This, he argued, paled in comparison to filling stations, which employ dozens ranging from attendants to cashiers, cleaners, and security personnel. His point underscored the notion that defending depots on the grounds of job creation was disingenuous, particularly when weighed against the massive losses Nigeria incurred through the subsidy racket.
Otedola’s comments go beyond merely assigning blame; they carry a sharp rebuke to current players still clinging to outdated models in the oil sector. He advised depot owners to accept that their facilities are becoming obsolete in the face of new realities, particularly with the Dangote refinery now offering large-scale domestic production of refined petroleum. He likened the situation to Nigeria’s cement industry, where the importation of bulk cement carriers became redundant once the country achieved local production capacity. “The same outcome awaits fuel depots,” he warned. “If the members do not adapt, they risk becoming irrelevant and possibly bankrupt. Instead of resisting progress, they should consider selling, restructuring, or investing in new value chains.”
The economic logic behind Otedola’s argument is clear. For decades, Nigeria has relied on imported refined petroleum despite being a major crude oil producer. This dependence not only drained foreign reserves but also created opportunities for manipulation under the subsidy regime. Depot owners became central to this arrangement, profiting from import documentation, storage, and claims tied to subsidy payments. With Dangote Refinery now capable of supplying much of Nigeria’s domestic demand, the justification for such depots grows weaker by the day. Otedola’s challenge to them is to embrace this transition rather than fight it.
Perhaps his most provocative suggestion was directed at the association itself. If depot owners are truly committed to competition and national service, Otedola argued, they should pool their resources and acquire one of Nigeria’s moribund refineries, such as the Port Harcourt Refinery. By doing so, they would have an opportunity to prove their capacity to innovate and succeed where the Nigerian National Petroleum Company Limited (NNPCL) had failed. It was both a challenge and an indictment—suggesting that rather than clinging to a corrupt subsidy system, depot owners should step into genuine refining and production if they wish to remain relevant.
Otedola’s intervention cannot be dismissed as casual commentary. He was once a major player in Nigeria’s oil and gas sector and experienced firsthand the operations of the subsidy regime. His credibility stems not only from his wealth but also from his insider knowledge of how the system operated. The implication of his statement is damning: that billions of dollars that could have gone into building infrastructure, funding education, or improving healthcare were instead siphoned off through fraudulent subsidy claims.
The political undertones of his revelation are equally significant. By explicitly naming Jonathan’s administration, Otedola draws attention to a period when subsidy scandals dominated headlines. In 2012, Nigeria was rocked by revelations from a parliamentary probe which uncovered that billions were being stolen through subsidy payments. While Jonathan’s government promised reforms, Otedola’s account suggests that the system was never fundamentally dismantled but rather entrenched to favor specific interests. The figure of N2 trillion allegedly siphoned is staggering, equivalent to billions of dollars, and reflects the scale of abuse that took place.
Moreover, Otedola’s comments reignite debates about the true cost of subsidy to Nigeria’s economy. For decades, government officials justified subsidies as a way to shield Nigerians from the volatility of global oil prices. Yet, in practice, the system became a black hole of corruption, draining public finances while failing to prevent chronic scarcity and queues at petrol stations. The question Nigerians must grapple with today is whether subsidy was ever truly about protecting citizens, or whether it was always designed to serve vested interests.
Otedola’s siding with Dangote also has strategic implications. By defending the refinery’s pricing strategy against depot owners, he is aligning himself with the argument that Nigeria’s future lies in domestic refining and market liberalization, not in subsidy-driven manipulation. His intervention strengthens Dangote’s hand in its battle with DAPPMAN, which fears being rendered obsolete by the refinery’s competitive pricing. Yet it also exposes the desperation of depot owners who, according to Dangote, even demanded an annual subsidy of N1.5 trillion to remain viable.
This demand, if true, underscores the parasitic nature of the system Otedola described. Rather than innovating or restructuring, depot owners allegedly sought to preserve their profitability through government payouts. In essence, they wanted the Nigerian people to continue underwriting their survival even in the face of structural changes that rendered their model redundant. Otedola’s rebuttal is clear: such rent-seeking has no place in a modern economy that must prioritize efficiency, competition, and self-reliance.
The billionaire’s intervention thus forces a reckoning with deeper structural questions. If N2 trillion could be siphoned in a single administration through subsidy-linked depot licences, how much more may have been lost over decades of similar practices? How many other sectors in Nigeria are similarly structured to reward intermediaries who add little value while draining enormous public resources? And what lessons can be drawn as the country navigates current debates about deregulation, domestic refining, and market reforms?
In the final analysis, Otedola’s revelations serve as both a warning and a call to action. They warn of the dangers of clinging to outdated and corrupt systems, which may appear profitable in the short term but inevitably collapse under the weight of inefficiency and public outrage. They also call for a reorientation of Nigeria’s economic structures toward genuine productivity and transparency. Whether depot owners heed his advice and restructure, or whether they double down on resistance, remains to be seen. What is clear is that the subsidy regime they once thrived on is increasingly indefensible in a country struggling with debt, inflation, and pressing development needs.
By shining a light on how N2 trillion allegedly vanished under Jonathan, Otedola has reignited public debate on the subsidy question. His challenge to depot owners to adapt to new realities marks a turning point in the fight over Nigeria’s energy future. It is now up to policymakers, regulators, and the Nigerian public to decide whether the country will continue subsidizing inefficiency and corruption, or whether it will embrace the disruptive changes represented by Dangote Refinery and others seeking to redefine the sector.
