Five Ways How to Start a Profitable Retail Filling Station In Tanzania

The retail fuel industry opens up opportunities for small and big players, giving a fair playing ground for those who want to be entrepreneurs in this sector.

The simple truth is that this line of business has been a “hidden treasure” only large firms and business elites are equipped with reliable information, expertise, and resources on how to successfully start, execute, and operate a successful petrol station business.

Most people see petrol stations everywhere but never thought about a fuel station as a viable business to get into.

I discovered it and decided to educate people and inspire them about it
Whether you are considering starting a new fuel filling station or adding more stations into your portfolio, this article will be a huge eye-opener for you.

1. Buying an existing petrol station.
The first option to go into the petrol station business is buying an existing one.

This is a better way than building a new station from scratch. And you can choose whether to buy a station from independent petrol station retailers or oil marketing companies. Buying a petrol station requires a lot of money.

And the cost varies depending on the size, location, and turnover that the petrol station generates.
If you are buying a petrol station from another person, you should apply for the ownership change of the current petrol station license at the Energy and Water Utilities Authority (EWURA).

You will submit a copy of the sale agreement to EWURA and let them know that you are the new owner of the petrol station.

A person selling you a petrol station must submit the retail stations and provide you a go-ahead to apply for such license. And he should declare to the authority that he is no longer the owner of the petrol station.

2. Leasing an existing petrol station.
This is the best (and easiest) way to start a petrol station business, especially when you’re getting started with a limited fund and have no prior experience running and managing a filling station. Why?

Because it is easy to manage this type of petrol station, it will give you a chance to learn and gain requisite experience in running and managing a filling station. Thus, it helps you run out of business whenever you find out the petrol station business is not for you.
The price for renting or purchasing an existing petrol station depends on the station’s location and turnover.

3. Become a dealer of an oil marketing company
Here, you’re appointed to operate a complete petrol station that has been already built and equipped by an oil marketing company.

You will be operating a petrol station under the umbrella of companies like Total, Oryx, Puma Energy, Lake Oil, etc. There a lot of reasons why you should franchise your petrol station.

But the biggest reason to choose this route is customer recognition because the oil company has already built credibility. So, you will spend little effort in marketing. The oil company has already done it. And most importantly, they also give you ongoing support and education to help you learn the basics of business.

The disadvantages of picking these routes are that they always give you a small profit margin per liter, affecting the profitability of your business. You will be under contract with them, so you will be required to source fuel only from them.

Whatever the price they set up, you will have to buy even if it is high. So, you have to follow all the strict guidelines and rules they set up.
With an initial investment of working capital between Tsh 150 million and Tsh300, you can become a retail petrol station dealer of one of the large oil marketing companies in Tanzania or East Africa.

4. Building Petrol Station From Scratch In Prime Location
Another option to get started in this business is to get a piece of land and build a petrol station from scratch, all by yourself.

This may be the hardest but most rewarding route because it takes a lot of research and proper planning. But you will reap immense rewards as you will be able to dictate your price and have total control of growing your brand from scratch.

You will need to get appropriate licenses, environment authorization from NEMC, and land use right before applying for the permit to operate a petrol station. If you can secure a piece of land in a place that is prone to vehicular traffic, then can guarantee yourself a sustainable profit

 

5.Start small scale fuel station with two pumps in rural areas

Having your small petrol station in the rural areas is far less expensive to set up and maintain and still guarantees a sustainable profit. Setting up a mini fuel station in rural areas can cost you less than TZS 60-70 million. But I would advise you to invest more if you can afford more.
As everyone calls it, the emerging modes of transportation, tricycles or boda-boda, increase the demand for petroleum products in rural areas.

I Know one of the entrepreneurs who started the filling station in rural Tanzania with nothing. It was very small -a two-post filling station; He did everything from scratch.

He was there every day to meet and greet customers and fill their tanks personally. Nothing was beneath him. The fuel filling station was profitable. The guy was moving about 600,000 liters of petrol per month. And from proceeds of his filling stations, he bought a fuel tanker. He now has a chain of over five fuel stations across the country.

 

So, what are you waiting for?

If you feel interested in exploiting opportunities in the petroleum industry, start working on your idea right away. There is a price to pay from thinking about something too long and missing an opportunity. Let’s not make such a mistake again. Let’s not miss these opportunities. To make sure you will be able to take advantage of these opportunities, can we discuss your project idea today?