Eight Profitable Investment Opportunities In Tanzania’s Downstream Petroleum Sub-Sector

If you rack brains to find perfect business and investment opportunities in Tanzania. Investing in downstream petroleum products is a better option.

With economic growth and an increasing mid-class population, the demand for oil and gas-related products is increasing in Tanzania.

This article explores lucrative business opportunities you can start in Tanzania anytime you ready.

1.Start a Petrol Station

If you’re brainstorming in order to find a perfect business idea in Tanzania and the East African oil and gas sector, investing your cash in the petrol filling station business is a wise decision.

 This business ensures steady profit in a reasonable time from setting up. You might feel the market is already flooded, but you can come in and have a go at it. Petrol stations are on every street corner because they make an insane profit.

Consider this:

A petrol station located in a highbrow area of the city with lots of traffic could sell between than 5,000 liters to 25,000 liters in a day. At least, assuming two-thirds of customers decide to keep malice with you, you’ll still 2,000 liters. Depending on the supplier whom you source fuel from.

The profit margin per liter ranges from 100 to 210 per liter.

So, if you sell 2,000 liters a day will make you TZS 100 × 2000 = TZS 200,000. In a month, you will have a profit margin of TZS 30 × 200,000 = TZS 6,000,000.

That figure can vary widely, depending on where the petrol station is located. And the supplier from whom you source fuel from.

For example, if the profit margin from your supplier is TZS 200 per liter. So for that rate, the profit margin per day would be TZS 200 × 5,000 = TZS 400,000.

Again, in a month, that will make you 30 × TZS 400,000 = TZS 12,000,000. So, this is why petrol stations are on every street corner because they make good money. So, everyone wants to jump into this business.

 

Related Project::A Sample Business Plan for Starting and Running a Road Logistics and Transportation Business for Fuel/Petroleum Products in Tanzania.

2.Setting your own lubricant blending/Manufacturing Plant

The demand for lubricant oil such as blended motor oil, brake fluids lubricating greases, and other oil-based additives is huge in Tanzania. That’s why the biggest marketers like Total and Lake oil recently have set up their own lubricant manufacturing facility.

So set up your own Lubricant manufacturing company in Tanzania can be a profitable venture. Although there are several lubricant oil manufacturing companies in Tanzania. But with a good distribution network, quality products, good marketing strategies, and sufficient start-up a new lubricant trading company can win a competition.

3.Gas Retailing/Distribution

Cooking gas or LPG distribution is one of the most profitable oil and gas business opportunities. Yes, it demands medium scale capital investment. You also need to have proper licensing from the relevant government agency. Also, the market for cooking gas distribution is increasing.

Related Project: A Sample Business Plan for Starting an LP Gas (Cooking Gas) Distribution/Retailing Business in Tanzania: A Business Plan for one Quick Gas Limited.

4.Lubrication Oil Retail Shop

Selling engine oil, brake fluid and hydraulic oil et al. is a profitable and highly thriving business venture an entrepreneur who is interested in making money from the oil and gas business value chain should consider. The fact that vehicle owners subject their vehicles to servicing at regular intervals creates a market for lubrication oil products. In recent times, there is an increase in the lubrication oil production sector as it is one business you can readily go into with the hope of making a great profit. The various needs of lube oils in homes, organizations, factories, and industries just cannot be overemphasized because the population of people who have mechanical need for oil has continued to increase over the years. So, for you to start out in this trade, have an expert carry out good feasibility studies.

5.Oil Farm/Depot Storage Services

Imported fuel as stated above are stored in tank farms. Most oil marketers don’t own tank farms and, as a result, always need to store their petroleum products in other tank farms. With a large operating capital, you can construct a tank farm for the sole purpose of leasing it out to oil marketers who bring in petroleum products.

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6. Products (Fuel) Haulage and Logistics/

Due to the increasing demand for petroleum products in East African countries, transportation of these products (for example, premium motor spirit (PMS), diesel, kerosene, and other petroleum products) has opened a lucrative investment opportunity for entrepreneurs. This business is about using fuel tankers (trucks) to distribute petroleum products with transport charges depending on the distance to be covered and the capacity of the truck.

You will have to obtain a license from EWURA to be allowed to transport fuel across the country or to neighboring countries. You will have to purchase a truck and hire a qualified and experienced driver who will haul petroleum products for marketers from the depot to their desired destination.

I would recommend you start by transporting petroleum products to landlocked countries like Uganda, Rwanda, Congo DRC, etc. Many transporters in this business transit fuel to neighboring countries such as Uganda, Kenya, Rwanda, and Congo DRC because there is an unlimited market and is more profitable for transit fuel to the neighboring countries than relying on transporting petroleum products from depots to filling stations locally across the country.

7. LPG Re-filling Plant/Center: 

I’d recommend this to anyone with financial muscle. As a refilling center, you will purchase bulk LP Gas and sell to distributors and consumers. It’s capital intensive and the total project cost for setting up a refilling center in Tanzania is TZS 250 million to TZS 300 million.

8. Establishment of Gas Cylinder Manufacturing Plant: 

It will interest you to know that Tanzania imports the LP Gas cylinders from India. So, there is no functional LP Gas cylinder manufacturing facility in Tanzania, and this presents immense opportunities for aspiring entrepreneurs with sizable amount of capital to set up a gas cylinder manufacturing plants in Tanzania.

                                      I hope this helps. Here at Tanzania Petroleum we are committed to champion extraordinary outcome by accelerating start, run and growing your business