Although the petrol station business is one of the lucrative business opportunities in Tanzania. The high initial capital requirement has been a huge stumbling block holding back many small investors to tap into this profitable business opportunities.
Many small investors have given up on their idea to go into the petrol station when they heard that it require TZS 200 million to 1 billion for petrol station set up in Tanzania.
Don’t bother if you currently can’t afford the capital requirement.
EWURA (The Energy Water and Utilities Regulatory Authority), the government agency responsible for regulating downstream petroleum sub-sector of the oil and gas industry (including approving and issuing the license for petrol stations, liquefied petroleum gas LPG business in Tanzania), has released a guideline to help you tap into this business even as a small investor.
The simple truth is that the demand for petroleum products is growing at a fast rate in rural areas. The part of these reasons is the increase in economic activities in those areas.
Read also: Petrol station business plan in Tanzania
Look all around. All over the rural areas in Tanzania. Villagers rely on kerosene. Big trucks transport crops. There is still a power-failure problem, so, people depend on generators—both diesel and petrol powered.
Most importantly is the emerging mode of transportation. There are tricycles or boda-boda, as everyone calls it, and it has increased the demand for petroleum products in rural areas. The good news is that all these vehicles and generators run on diesel or petrol that you can set up in your fuel station and get huge income selling it. The surprising truth is that there are fewer filling stations in rural areas. EWURA.
Even EWURA has set up less requirement to encourage investors on set up stations in those areas.
It’s cheaper to start. To set up a mini fuel station in rural areas can cost you less than TZS 58 million. But I would advise you to invest more if you can afford more.
And you can easily raise the capital without begging, bribing, or cajoling friends who might not willing to help you. Also, you can start small like this and grow bigger and develop more stations in other cities of the country.
If you have read my articles on purchased my feasibility report on how to set up profitable petrol station business in Tanzania, you will discover it require
Tsh 200 million to 1 billion to set up a petrol station in Tanzania especially in town areas. Now huge start-up costs are not barrier to become a petrol station business owner.
If you’re passionate about starting a filling station and have limited funds. I would advise you it’s pretty cheaper to set up a mini fuel station in rural rather than in a commercial city. Moreover there less government requirement for setting up a petrol station in rural areas as the EWURA want to encourage investors to set more fuel stations in remote locations
For example, as only a minimum size of 400 square meters of land space, EWURA can approve for mini fuel stations set up in those areas. And you can start with two storage tanks. Depending on which fuel products have high demand in your location but you can start with one tank for diesel and one tank for petrol. All of 5,000 or 4,5000 liters capacity.
How to Get Started With Profitable Mini Fuel Station In Tanzania
1.Business Plan and Feasibility Report.
Modern business start with a comprehensive business plan. To respond with rapid changes in the industry like regulatory changes and oil price volatility, successful oil and gas business owners have embraced the business plan for strategic planning as well as to respond with uncertainty across the industry.
The sad reality is that most Tanzanians don’t understand the value of the business plan. Their needs for the business plan come when they consider requesting a bank loan.
Technically speaking, in today’s competitive oil and gas business, develop your own business plan will help you stand out from the crowd. Petrol station business can be lucrative that needs a lot of strategic planning. Most Tanzanians when they first consider joining the petrol station business were motivated by high-profit margin per liter rather than the total sales volumes that the petrol station business generates.
It is not a secret that the petrol station business can make a profit margin of 100 to 300 per liter. But since the business generates a solid profit margin does not mean it would be profitable for you.
Let’s say your margin is TZS 200 a liter and you sell only 300 a liter per day. That will make you less money than some someone who has total sales volume around 6000 liters a day.
Hence why I strongly recommend investors to focus on total sales volume versus a profit per liter of fuel. And a comprehensive business plan can help you forecast your sales projections and help you see what kind of business you are building.
2.Getting the Needed Government approval.
To construct and operate a petrol station anywhere in Tanzania, you will need government approval. There are several approvals you may need. From the National economic empowerment council to EWURA.
I would advise you to hire a consultant to assess if your location is commercial for starting petrol station business before you start the process of acquiring necessary permit and license
3.Getting EWURA Approval
EWURA is the government agencies regulate the oil and gas business in the downstream sub-sector or segment of the petroleum industry. EWURA approval comes in two ways:
- Approval to construct.
After all environmental impact assessment carried out by NEMC, the building permit, and the land title dead you need to get approval from the EWURA to construct your station. You can’t build the petrol station the way you want. You have to meet the EWURA requirement. I will advise you to visit the EWURA office to learn more about their requirement.
2.License to Operate
After you have built the petrol station, you still need EWURA to approve it and give permission to start selling petroleum products. The license to operate your petrol station cost TZS 1,000,000.
I hope this helps.