Owen Bonither Gowell, Director of LIFUMA Energies Ltd and ALPHA Energy Ltd, talks to Tanzania Petroleum about the profitability and revenue potential of petrol stations in Tanzania, and the critical role location plays in determining success.
1.How much revenue does a petrol station make per month on average?
The average revenue of a petrol station can vary greatly depending on traffic, branding and promotion strategy. In urban centers, a petrol station can generate between TSh 10 million and TSh 15 million per month, while those in peri-urban and rural areas typically earn TSh 4 million to TSh 7 million.
2.What affects the profit margin of a petrol station?
The profit margin of a petrol station is primarily influenced by fuel purchase costs, competition, and operational expenses. If costs are managed efficiently, it is possible to achieve a profit margin higher than the benchmark set by EWURA.
3.What additional services can petrol station owners offer to maximize profitability?
The additional services depend on customer demand in the trading area. Common options include car wash services, a convenience store, lubricants and LPG, ATM, parking, coffee shop, a service bay, tyre sales, and restaurants. However, investors should research carefully to confirm demand before introducing any new services.
4.What is the role of location in petrol station profitability?
Location is everything. It plays a decisive role in petrol station profitability. The right location will attract more customers, thereby increasing sales volume. A poor location, on the other hand, can trap investors in years of underperformance. Since a petrol station cannot be moved once built, conducting thorough location research before committing is crucial.
4.What are the key factors that impact petrol station profitability?
There are many different factors that can affect a petrol station’s average revenue, including location and the presence of competing establishments in the area. It also depends on the fuel purchase model, whether discounted-based or bulk purchases.
Additionally, revenue may depend on whether the station has contracts with corporate customers such as transporters (trucks and buses), tour companies, manufacturers, and mining companies. Petrol stations with agreements with corporate customers tend to sell higher volumes compared to those that rely solely on individual motorists and drivers.
