Despite the growing oil price volatility and tightening margin in today’s downstream petroleum products business. The demand for petroleum products is growing at a rapid pace in the country.
No matter how much is imported, more oil is needed to support the ever-growing population and support continued economic development primarily in Tanzania and generally in East Africa.
So if you are interested in the downstream petroleum products business in Tanzania or East Africa. The article shows you how the downstream petroleum products supply chain real work in the region.
Downstream petroleum products business divided into three segments:
1.Oil marketing companies: These are companies that import petroleum products from oversea. They owned oil terminals, trucks, and retail stations. This kind of ownership allows oil marketing companies a high degree of control over what happened to the oil market. Oil companies with a huge market share in Tanzania including Puma energy, Total and Oryx energies.
2.Distributors: They own trucks but not terminals or storage facilities. They always contracted for supply form the oil marketing companies. They obtain petroleum products at the oil storage facilities or depot and deliver it to the petrol station and the commercial and industrial customers such as mining companies. Distributors serve oil marketing companies (suppliers) and dealers.
3.Dealers: These are often entrepreneurs who build their retail petrol stations from scratch or used branded petrol stations of the major oil marketing company. They always purchase fuel from major oil marketing companies and resell to the motorists. Besides selling petrol, diesel, kerosene, cooking gas, and engine oil, those contract dealers operate side businesses related to the fuel retailing such as
· Offer car washing services.
· Offer car repair services.
· Have a restaurant and Fast food
· Have a shopping mall.
· Banking (ATM)
· Even rent out vacant offices to companies like DSTV, telecommunication companies, etc.
The dealer who uses petrol station carrying the brand name of major oil marketing typically have an agreement that stipulates that the dealer will buy fuel exclusively from supplying company that owns the brand name.
So hopefully, this helps you get a detailed understanding of how Tanzania’s downstream petroleum products work.