Are You Clear and Very Specific About the Costs and Requirements for Starting a Small Petrol Station In Rural Areas

The increased transportation activity in rural areas presents ample petrol station investments and expansion opportunities.

But like any opportunity, challenges are there; the way we approach these challenges is to focus on getting insights and making the right business decisions, which is why we write this article to inform decision-making.

The popular misconception is that if you have land in rural areas, you can build a profitable petrol station.

To invest with a high probability of success in this competitive market, investors and entrepreneurs must have a 360° view of the regulatory requirements, costs, expected return on investment, customers, and competition in their trading areas.

The article will give a more profound and complete understanding of the market condition, cots, requirements, and procedures for petrol station investment in rural areas.

Many small-scale entrepreneurs had given up on investing in the fuel filling station when they heard it required TZS 500 million to 1 billion for a 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 the 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.

Most notably is the emerging mode of transportation. As everyone calls it, there are tricycles or boda-boda, increasing 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 colossal income selling it.

 The surprising truth is that there are fewer filling stations in rural areas. Even EWURA has set up fewer requirements to encourage investors to set up stations in those 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.

Suppose you have read my articles or purchased my feasibility report on setting up a profitable petrol station business in Tanzania. 

In that case, 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 a barrier to becoming 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. 

For example, as only a minimum size of 400 square meters of land space, EWURA can approve 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, 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 businesses start with a comprehensive business plan. A good business plan will help raise capital and help you plan projects, increase cash flow, improve operation, and make decisions.

When you enter a fuel station, you are joining a very competitive market. And your might compete with major oil marketers who have resources and expertise. A good business plan can be used as your road map to help you win the competition and improve cash flow

 When they first considered joining the petrol station business, most Tanzanians were motivated by a high-profit margin per liter rather than the total sales volumes generated.

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 someone who has total sales volume of around 6000 liters a day.

Hence, I strongly recommend investors 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 a petrol station business before you begin the process of acquiring the 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:

. operational license

After building 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 costs TZS 1,000,000.

 

Final Words

We have a deep understanding of the fuel and petrol   sector in Tanzania and Africa: this, combined with in-depth research and analysis, enables us to help business professionals understand the economic and regulatory landscape of the fuel retail industry.

 

 

Many small-scale entrepreneurs had given up on investing in the fuel filling station when they heard it required TZS 500 million to 1 billion for a 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 the 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.

 

 

Many small-scale entrepreneurs had given up on investing in the fuel filling station when they heard it required TZS 500 million to 1 billion for a 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 the 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.

 

 

Many small-scale entrepreneurs had given up on investing in the fuel filling station when they heard it required TZS 500 million to 1 billion for a 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 the 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.