Is There A Future For Petrol Station in Tanzania?

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By Hussein Boffu

The petrol station is a resiliency opportunity, albeit capital-intensive, due to the nature of its assets.

The population of this country is growing. The number of cars on the roads is increasing. So our economy and people need more fuel.

Demand for conventional fuels (such as diesel, petrol, lubricants, and LPG) will remain for decades.

Unlike Europe, where the filling station investors make most of their money from non-fuel products like drinks and foods.

The petrol stations in Tanzania make most of their money from fuel up to 60 to 80 percent depending on the locations.

For urban sites, non-fuel products will become increasingly relevant in convenience retail, food service, car wash service, and other ancillary offers.

Like in any sector, the challenges are there, but the way we approach the challenges is by focusing on opportunities and making the right decision.

The first issue is declining in sales volume. Regulators fix the margin. And there are  proliferation of new petrol station brands in the market.

In many sites nationwide, most petrol stations sell based on cost leadership and heavy discount. This reduced sales volume, which in turn led to reduced revenue.

The other challenge is navigating onerous regulations and industry standards. The petrol station is a unique sector.

Many regulations need to be fulfilled to run successful petrol stations.

Another area for improvement is the supply chain. We know that we need to ensure the constant availability of fuel in the stock.

However, we know that with a well-planned location, a clear understanding of consumer demand, and employ aggressive marketing strategies, you can navigate this complex industry and walk like a winner.

With this scenario playing out daily, petrol station owners need well-planned locations proximate to demand.

Also, non-fuel products and services development like food services, restaurants, mini supermarkets, coffee shops, car washes, garages, and other complimentary services.

That’s the future of petrol station owner-businessmen who wear many hats in an ever-changing business environment.

Hussein Boffu runs a consultancy helping elite entrepreneurs reach their goals through actionable business planning. Contact him via email at hussein.boffu@tanzanapetroleum.com or by calling, texting, or WhatsApp at +255(0)655376543.