The retailing of petrol and diesel in Tanzania is one of the high cash-flow sectors.However, it is a business that faces unique challenges: the profit margin is regulated by the Energy and Water Utilities Regulated Authority (EWURA), and competition is a fierce due to the proliferation of local and international filling stations.
For investor to achieve satisfactory profits and return on investment (ROI) within a short period of time, he cannot rely solely on luck. He must understand and manage the seven main drivers that drive profits in the current Tanzanian market.
- Sales Volume: The Secret of “Volume over Margin”
The first and most important driver of a petrol station in Tanzania is sales volume. Unlike other businesses where you can raise prices to make more profit, fuel prices in Tanzania are regulated. Currently, the retail margin is around TZS 108 per liter . This means that your profit is locked in on every liter you sell.
To cover operating costs (salaries, electricity, rent, and insurance) and remain profitable, a facility must sell a certain number of liters per day (the break-even point). The most profitable facilities are those that can sell between 5,000 and 10,000liters per day. In this business, one liter is worth little, but one million liters per year is worth millions in profit
2.The Power of Location.
The location of your facility determines whether you will get the required “Volume”. In the Tanzanian market, the following locations are the most profitable:
- Township Areas: Statistics show that petrol station located in townships tend to perform well on the forecourt sales as compared to the ones in the suburbs.
- Highways & Transit Routes: Tanzania is a transportation hub to neighboring countries (Zambia, DRC, Rwanda, Burundi). Transit Trucks (e.g. Morogoro Road, Tanga Road) are very profitable because one truck can fill 300 to 600 liters at a time.
3.Non-Fuel Revenue (NFR)
Since fuel profits alone are constrained by EWURA, the most profitable stations in Tanzania in 2026 are those that use the “Integrated Service Hub” system.
- Convenience Stores: The presence of modern convenience stores (e.g. Bonanza , Shoppers , or V-Mart ) attracts private vehicle customers who want more than just fuel. Revenue from the sale of beverages, food, and quick-service items can contribute up to 15% to 25% of a facility’s total profit.
- Rental Income: Petrol stations are secure and busy areas. Renting space for bank ATMs (e.g. CRDB, NMB), pharmacies, or fast food restaurants creates a guaranteed monthly passive income that is not dependent on global oil prices.
- Service Bay & Car Wash: Lubricants have a higher profit margin than oil itself. A service bay with a modern oil change and car wash creates a value chain that keeps customers in the service bay longer and spending more.
4.Shrinkage Control
An often overlooked profit driver is waste control . In a business with such unstable margins, wasting 100 liters per day is equivalent to wiping out the profit of 1,000 liters sold.
- Evaporation: Fuel loses its volume due to heat. Proper management of underground tanks and construction that adheres to legal standards help reduce this physical loss.
- Theft and Fraud: The use of Automatic Tank Gauging (ATG) technology is essential in 2026. This system allows you to see the amount of fuel in the tank via your mobile phone, preventing unscrupulous employees from stealing fuel or importing undocumented fuel.
5.Metrology Integrity.
Today’s Tanzanian is cunning and afraid of being “stolen.” The biggest driver of profit is trust .
- WMA Verification: Stations that build a reputation for delivering the exact amount of fuel paid attract many repeat customers. Once a customer discovers that your pump is “under-pouring,” you will lose them and everyone they tell.
- Product Quality: Ensuring that fuel is free from water and adulteration is a key to long-term profitability. A facility with a reputation for damaging customers’ engines will not be able to survive in the market, regardless of the beauty of its facilities.
6.Corporate Agreements and Fuel Cards (B2B Strategy)
Retail customers may be flexible, but fleet customers are the ones who give you guaranteed sales.
- Government and Corporate Contracts: Servicing government vehicles or large transportation companies through an invoicing system or fuel cards ensures that the facility has a high monthly turnover.
- Cash Flow Management: Although these contracts are often short-term loans, they guarantee you a large “Volume”. The secret here is to have enough working capital so that you can wait for the monthly payment while continuing to buy new fuel.
7.Digitalization and Pay by Number
In 2026, cash use is declining in Tanzania. The most profitable establishments are those that have invested in digital systems.
Pay by Number (Mobile Money): Simplifying payments via M-Pesa, Tigo Pesa, or bank cards (Visa/Mastercard) reduces queues and increases the security of your funds.
Data Analytics: Modern systems help you know when most customers come in, which type of fuel is the most expensive (Petrol vs Diesel), and which employee is the most efficient. This helps you make data-driven business decisions instead of emotions.
Read also: The Cost of Setting up Petrol Station Project: Business Plan and Feasibility Report.
Conclusion: The Secret to Long-Term Success.
The petrol station business in Tanzania in 2026 is a game of efficiency . Since the profit per liter is fixed, the secret to success lies in:
- Looking for the best location with a large circulation.
- Increasing additional revenue (stores, ATMs, and garages).
- Controlling loss and theft through technology (ATG/POS).
- Building trust between the measurements and the customers.
An investor who can combine these factors with excellent customer service will find themselves recovering their capital within 5 to 7 years and continuing to generate sustainable profits in the rapidly growing energy market in Tanzania.
