The petrol station is a lucrative business in Tanzania or Africa that needs a lot of strategic planning. The good news is that with sufficient capital and conducting solid research, hardworking entrepreneurs can start a petrol station serving their communities and support their families.

Here are steps of being successful, effective energy entrepreneurs in all aspects of the retail petrol station industry.

1.Study the fuel market:

If you want to go into a business, the first thing would be to verify the profit potential of the business. And that’s so easy to find out abo the petrol station business. So start by looking at the potential of the petrol station business in Tanzania. The first thing you will need to do is to determine the requirement and break down the cost of starting a petrol station business in Tanzania. And how much does petrol station earn per day or month? 

Read:[eBook] The Complete Guide to Starting a Petrol Station in Tanzania

 

2.Identify profitable petrol station location through feasibility study

Having a successful petrol station business is more of the viability of the location than the cost involved,

Selecting the right location for your fuel station is crucial to maximizing profit and ensuring your business’s long-term success.

People make the biggest mistake: they purchase land and rush into the building or buying a petrol station without doing solid homework.

They spend a lot of money, time, and effort building or buying a petrol station only to find that the station is selling a little volume from the market in trading areas. They are losing investment time and effort.

So if you are thinking of opening a new petrol station, identify an area with the potential to achieve huge fuel sales volume. Here are some factors to consider when performing research within the area:

  • How much fuel volume you expect to sell per month in the trading area?

Determine the quantity and type of cars and vehicles per day passing in your location. By collecting traffic data, you will estimate the fuel volume that you expect to sell in your trading areas and project the monthly fuel volume that your location might sell. This will also identify whether there is an opportunity to achieve greater volume in the future. It would also aid you in determining the underground fuel storage tank’s capacity to buy for your new site.

  • .Who are your competitors?

It is crucial to understand who are your closet competitor are you trading areas and identify their strength and weakness and what volume they are achieving.

If there already other petrol stations existing in the same trade area, Identify what volume they are achieving. You may also need to identify the competitive advantage your new site could gain on its fuel volume. To collect competitor information, visit their sites and gather bits of intelligence from their pump attendants.

3.Prepare the business plan

Petrol station business plan will enable you to think through every aspect of your business in detail and will stand you in good stead for discussions with investors and loan agencies. It will also help you raise capital from investors and banks. The business plan also makes you look professional to investors as they know you have done your homework.

Read also: A Sample Business Plan for Starting, Operating and Maintain Future Sustainable Petrol or Service Station in Tanzania and East Africa

Your petrol station business plan should comprise an executive summary, vision and mission statement, objectives, industry trends, market analysis, SWOT analysis, marketing plan, operational plan, and financial data and cash flow projections.

4.Getting Needed Government Approval

There are several approvals you may need.

The first approval is town planning to ensure the location meets the plan of the city and doesn’t block any infrastructural facility or affect the plan of the town.

You will also need to get an environmental impact assessment. Through EIA you can obtain EIA Certificate which is mandatory by law for any project or investment.

You will also need to get EWURA approval to construct a petrol station as well as the license to selling fuel at your station.

I hope this helps.

It takes substantial time and resources to build a petrol station? So why you should risk the investment without knowing whether your target location is going to be profitable?

Today, many investors and entrepreneurs spend substantial time and resources on project planning and execution, while they pay little attention to assess the viability of their petrol station project location. This leads to invest in the wrong places or make a decision that may not help them win in this competitive market.

Whether you are building a petrol station from the scratch or you are buying a petrol station business that is already running in the market, location is a key determinant of the profitability of your petrol station business

 

                                         Choosing the Right Petrol location

If you want to build a petrol station, location is a key determinant of whether your petrol station business will fail or succeed.

 If you make a mistake in location, the business is already a huge mistake. For your petrol station business to be profitable, you need to set up in the best location in your target city.

  People make the biggest mistake: they purchase land and rush into building petrol station without conducting a viability assessment of their location. They spend a lot of money, time and effort building a petrol station only to find

that the station is selling a little volume from the market in trading areas. To reduce risk, it advisable to always hire a consultant to conduct a viability assessment of your location.

Choosing the right petrol station depends on your target city. But there are some factor to look into to determine the profitability of your location whether your location is worth investing

 

Here are some factor you are going to have to look into to determine the profitability of your location 

1. Traffic count and flow

In terms of traffic flow, you assess the quantity and type of vehicles passing on your site. You will also need to observe which way the traffic goes and what times of the day.

 

Find out also if there are alternative routes that draw traffic away from the site you are reviewing and think about the effect this might have upon the overall value of your building. The traffic count would help you determine what fuel volume your proposed location has the potential to achieve per month in your trading area.

 

2. Accessibility and Visibility

How is easy for motorists and consumer to enter and leave the sites? How is your site accessible from the main road? You have to ensure that your site allows access via roadways and via the frontage. Your location must have easy in and out access. Also is important for your site to be located at an optimum distance that allows motorists driving at normal speed to have enough time to make buying decisions, slow down their vehicle, and enter your station safely. If there is a problem with access and visibility, determine what you can do to improve access to the site. 

 

3. Demographic of the community

Demographic information tells you about the physical and economic nature of your community. You are going to know whether the demographic of the community in your target area will increase the value of your petrol station business. For example, if you walk around and visit several petrol stations in your area, you are bound to find that they offer complementary services. For example, some petrol stations may have a mini supermarket, restaurant, car wash, ATM services, etc. But not all areas need such additional services. So demographic information would tell you whether there would be a demand for these complimentary services so as you can consider it too.

4. Competitors

The last thing that you are going to want to assess about your property is competition. Who are your closet competitors are, what strengths and weaknesses of their brands? You should assess determine what fuel volume are they selling. You should also observe the layout of their petrol station facility. Does it easy to navigate? Does it look good from the outside? Does it look clean and safe? Does it have enough parking areas?

The petrol station business should have the advantage of being in an easily accessible and obvious location. You should assess how much fuel volume you expect to sell in this area per month. Once you answer this question it can help you develop strategies that might help your new petrol station win in the market.

Here’s why you need a feasibility report for your petrol station:

· It shows you the best location to set up a petrol station

· It will help you to decide whether or not to go ahead with the proposed site build

· It gives you the estimated fuel sale volume per month and profit potential for your petrol station in the trading area.

· It also helps you provide with all necessary costs and expenses so you don’t overspend on anything during set up.

· It also helps you know the number and size of facilities and equipment you should install at your petrol station (Like the size of storage tanks, number of pumps, whether you should have a car wash, supermarket or not)

· It shows you the right estimates and type of vehicles and cars passing in your location.

· It can also stop you from making a wrong investment in your petrol station

· It can help you know your competitors, their strength and weakness. And develop strategies that give you competitive advantages.

· It shows you the right estimates and type of vehicles and cars passing in your location..

Petroleum continues to be the most important form of modern primary energy in Kenya.

Local oil and gas demand has been growing over the last decade. As Kenya’s economy grows there will be more consumption of petroleum products in the region. It is estimated that by 2030 the consumption of petroleum in the country will be 12 million metric tons (MT). This proves that the country has more potential for setting up a new business in its petroleum sector. Here are six thriving opportunities in oil and gas in Kenya.

 

1.Start fuelling Stations

With inadequate petrol stations serve the population of 47 Kenyans. More fuel station investments in the country are needed to enhance the availability of quality petroleum products across the country.

Your petrol station is not necessarily in a city like Nairobi. You can start a small fuel station in the rural areas. Major oil brands focused on urban areas. So they always neglect these rural 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. So hard-working entrepreneurs and investors can open new fuel stations to serve the communities and support their families.

2.Go into LP Gas (Cooking Gas) Business.

A large proportion of Kenyans are still using traditional sources of cooking energy such as firewood and charcoal. So committed entrepreneurs can join into LPG business to serve their communities and support their families.

How do you invest in the LP Gas business In Kenya depends on your financial capacities? But investment opportunities in LPGas are including: LPGas retailing business, LP Gas plants, and LPGas logistics, and LPG reseller shop.

3.Oil Farm/Depot

Petroleum infrastructure is the major concern in Kenya’s petroleum sectorAnd the demand for fuel has grown the capacity of infrastructure. Imported fuel as stated above is 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.

4.Venture into road fuel transportation business

 If you remember, your secondary school Biology subject says, “Movement is the quality of living things,”

So following the increasing demand for petroleum products (for example, premium motor spirits, diesel, kerosene, and other petroleum products) in East Africa, and Central Africa. Starting a business that focuses on moving petroleum products from oil depots to the desired destination across the country and landlocked neighboring countries in East and Central Africa, including Burundi, Rwanda, DR Congo, Zambia, Malawi, Uganda, and Kenya, can be a lucrative investment.

5.Inaugurate Bajaji /Boda Boda ( tricycles ) service center.

 The country has experienced a proliferation of new modes of transportation. There are tricycles or boda-boda, as everyone calls it

And due to their capacity, some service stations refuse to serve them because they say that they spoil their pumps. Start a specific service center that serves that part of the market can be a lucrative business opportunity.

6.Community kitchens

 LPG equipment costs remain a major hurdle for low-income households. This presents an opportunity for a community kitchen in low-income areas.

 Your community kitchen provides space for people to prepare high-quality food. Anyone can rent out kitchen space for an affordable price and access LP gas, equipment, and appliance. This will help them come to your space, cook and leave and let someone else cook. Your services will save them money as they don’t have to invest in cylinders and cookers.

There is so much opportunity in oil and gas in Tanzania and East Africa that historically I don’t think has been realized.

The demand for talented, young people who have a unique way of thinking and applying technology can positively shift the oil and gas industry.

Nobody has done anything in the oil and gas industry as Uber has done in transportation. The matter is that the demand for petroleum is overgrowing in East Africa and would be around for centuries. So opportunities for talent are uniquely elevated.

If you brainstorm to be part of this industry, Here are tremendous entrepreneurship opportunities in the petroleum sector.

1.Develop an App to curb illegal cylinder refilling
Illegal cylinder refilling is a significant challenge that keeps busy all major oil marketing companies in the East African petroleum downstream sector.

One of the lucrative opportunities is to develop an app that helps to deal with challenges in the downstream petroleum sector. An app help companies track every LP Gas cylinder across the distribution and supply chain. As the customer takes it, companies know the turnaround time for the cylinder, so they do not see it come back., they can easily track each cylinder.

2.Alternative smaller fueling stations
We don’t have to have big massive petrol stations everywhere. Not every part of the country needs a fuel station that also offers a complimentary restaurant, supermarket, and ATM services.

It is not every corner of Tanzania need that you want to go to the petrol station and eat or buy some groceries. There is the time when you go to the petrol station you wish to your services. So if you are searching for business opportunities, starting a small petrol station can be the best choice.

Furthermore, your petrol station is not necessarily in the city like Dar es salaam or Mwanzania. You can start a small fuel station in the rural areas. Major oil brands that prefer urban areas. So they always neglect these rural 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.

3.Station dealerships
Start your fuel station can be a large and intimidating investment, especially if you are new to the retail petroleum marketing sector. By partnering with a major oil marketing company, you will have the opportunity to own one of their stations, and they will help ensure that you have everything you need to have a successful start in the retail fuel sector,

4.Start Bajaji /Boda Boda ( tricycles ) service center.
The country has experienced a proliferation of new modes of transportation. There are tricycles or boda-boda, as everyone calls it

And due to their capacity, some service stations refuse to serve them because they say that they spoil their pumps. Start a specific service center that serves that part of the market can be a lucrative business opportunity.

5.Community kitchens
LPG equipment costs remain a major hurdle for low-income households. This presents an opportunity for a community kitchen in low-income areas.
Your community kitchen provides space for people to prepare high-quality food. Anyone can rent out kitchen space for an affordable price and access LP gas, equipment, and appliance. This will help them come to your space, cook and leave and let someone else cook. Your services will save them money as they don’t have to invest in cylinders and cookers.

6.Build an e-commerce platform for maintenance repair and operation (MRO)supplies

If you are field manager in Tanzania and you need to replace a valve, it might be difficult and time-consuming to find it. This leads to a loss of productivity. But you can help build an e-commerce platform that allows businesses in the oil and gas industry and construction sector to get what they want quickly. This platform would enable users to source maintenance, repair, and operation equipment like ordering a book on Amazon.

7.Become LP Gas(Cooking Gas) Reseller.
The LP Gas retail shop is popularly known as LP Gas dealer or LP Gas reseller. As you walk along the streets of Tanzania, you will notice that there are retail shops on every corner. It is cheap to start this business. You need TZS 2 million to TZS 6 million to start an LP Gas retail shop in Tanzania. The key factors to success in this business are location and your marketing skills. A prime location is a key determinant to the success of an LPG retail shop. Excellent customer services, word-of-mouth marketing and free delivery, are crucial to success in this business.

I hope this helps

Here are five trends that are changing the petrol station industry in Tanzania and Africa.

1.Intense competition:

For quite sometimes Tanzania’s fuel retail market has been dominated only by three major brands. But recently, numerous small players have invested in the petrol station business across the country.

In April 2021, the study done by Kalibrate Technology Inc, reveals that over 150 are under construction. As more players joining the market, competition increases. If you decide to invest in a petrol station without conducting solid research about the potential of your sites, your closest competitors, and how much liters you expect to sell in your trading areas, you might suffer from years of no growth.

2.Growing demand for a fuel station in rural areas
The need for a fuel station in rural areas is growing at fast rates.T he growing demand for retail petrol stations in those areas is driven by increasing economic and farming activities. The farmers constantly require diesel in huge quantities to operate their windmill to pump water for their livestock as well as crops and to operate their trucks. There is also a proliferation of trucks that are used to transport crops in those regions that rely on diesel and petrol. The fishers constantly require fuel to power their boats.

So if you plan to open a new petrol station, the idea of starting small petrol stations in rural areas can be wise decisions

 

3.The shift in customer demand for more services

In April 2021, the study done by Kalibrate Technology Inc, reveals that over 150 are under construction. As more players joining the market, competition increases. If you decide to invest in a petrol station without conducting solid research about the potential of your sites, your closest competitors, and how much liters you expect to sell in your trading areas, you might suffer from years of no growth.

The shift in customer demand for more products and services.

When I was a kid, the petrol station was a place for buying just diesel and fuel. But there is changing customer behaviors. Customers expect more than just filling fuel to their car. They want to wash their cars, change oil, buy fast foods, drinks, etc. 

 Offer complimentary services like car washing, car repair, restaurant, shopping mall, Supermarket will draw more customers to your site and maximize revenue.

4.Focus on safety and sustainability.

Regulatory authorities are arguing about meeting  health, safety, and environmental standards. To thrive in fuel station business, your aim should be to operate a clean, well-maintained service station environmentally and safely. 

5.Focus on the relationship of trust rather than a transaction.

Customers want more than to consuming oil from your station. They need advice and guidance on what type of lubricant oil will be suitable for their vehicles. Guiding and advise your customers will help you earn your customers’ trust, refer your stations to their friends and improve sales volumes. Ensure that your station is managed by efficient and well-trained men who know how to deal with customers and understand the products to help customers make the right choices. Building a strong relationship with your customers is key to drive your fuel sales and services.

6.Electronic Payments
Cash is responsible almost for 95% of petrol station transactions in Tanzania. However, electronic payment options will grow in the future.

I hope this helps.

.

The fuel market is changing too fast—competition increases. And lowering prices or provide free window washing is not enough to stay ahead in this competitive market.

Whether you are looking to open a new petrol station or buy the fuel station that already exists in the market. Here some areas of focus to ensure you make better decisions to improve operational performance.

1.Location

If you want to build a petrol station, location is a key determinant of whether your petrol station business will fail or succeed.

If you make a mistake in location, the business is already a huge mistake.

For your petrol station business to be set up, you need to set up in the best location in your target city. People make the biggest mistake: they purchase land and rush into building petrol station without doing a little homework.

They spend a lot of money, time and effort building a petrol station only to find that the station is selling a little volume from the market in trading areas.

The petrol station business should have the advantage of being in an easily accessible and obvious location. You should assess how much fuel volume you expect to sell in this area per month. 

Read also: How to Assess the Suitability Of Potential Petrol Station Location to Make the best choice for your Project in Tanzania

No matter how good your marketing strategies are, you will make short sales if you build a petrol station in a non-strategic location. Before you pour your blood, sweat, tears, and a lot of time and resources into building a petrol station, you should evaluate your location and do a little homework to know whether your site will sell before you go into the trouble of building petrol station.

You will need to answer “Yes” to this question: “Will a petrol station sell in this area.

.2.Market

When you are in the petrol station business, you are operating in a very lucrative but competitive market.

Successful entrepreneurs in fuel station business understand their competitors and how they are performing, and their strengths and weakness? You should also identify infrastructure and the requirements.

3.Brand

The consumer has a certain perception of particular petroleum brands. Entrepreneurs need to understand the position of their brands and the strength of the brands they would like to acquire

4.Facility.

Your facility should offer great customer experiences and meet their needs. The facility should have enough space for vehicles to queen and make exist turn. By ensuring you keep environment and washrooms clean, you will build customer loyalty.

5.Marketing

The petrol station is no longer a place to buy just fuel. It offers opportunities to do complementary busineslike car washing, car repair, restaurant, shopping mall, Supermarket, etc.

 Offering complimentary services related to petrol stations will bring more customers to your fuel stations and maximize sales volume and revenue.

Read also: A Sample Business Plan for Starting and Running A Petrol/Service Station in Tanzania

6.Prices.

Although selling you fuel at low prices is not the only strategy to stay ahead of the competition in the fuel market. But customers also want to get quality fuel at very fair prices. So look at how your competitor set up prices that please customers and set yours at a competitive price, too. Competitive prices will attract customers to your site.

7.Operations

It is essential to understand that having a service station in a suitable location that is equipped with modern dispensing equipment is not enough in today’s competitive service station division of the oil and gas sector.

To win the competition in today’s crowded retail service station business, you should ensure that your fuels station is managed by efficient and well-trained men who know how to deal with customers and keep them; men who know the products and how to dispense them; men who know sales psychology and safety practices; and men with an agreeable personality that is pleasing and inviting.

 

I hope this empowers your decision making. Go out there and make it happen; you will thank me later.

 

In a business sense, the business that supplies products and services with sufficient and notable demand would grow by leaps and bounds.

If you brainstorm to find the right project for investment, here are recession-proof business opportunities that you can pursue.

1.Fuel filling station
So long there are human beings who need to move around. Motorists will never cease look for a place to fill their vehicles with fuel.

And that is why the petrol station business would continue to be one of the sustainable business. The business thrives even in a receding economy.

Regardless of the status of the economy, people drive. Commercial and transport vehicles will look for a place to fill their car tank with fuel. So a petrol station will never run out of business in any economy.

Even if you decide to stop running a business, selling storage tanks, fuel pumps, and other equipment can recover some of your investment. If you decide to stop running this business, you can choose to rent or sell your petrol station and still recover all your investment and more.

Read also:    How To Start Petrol Filling Station In Tanzania- Complete Guide

2.LP Gas(Cooking gas) business
As long as food is a fundamental human need, cooking is a human necessity too.
More cooking is done in households, hotels and restaurants, schools, and colleges. This is the simple reason why you should consider venture into LPG (cooking gas) business. With good marketing strategies, a hard-working entrepreneur can build LPGas business to serve their communities — and support their families.

3.Start engineering and maintenance service company.

As long as there are oil and gas facilities across the country, including gas processing plants, oil terminals, depots, and oil tank farms, there are numerous opportunities to offer low-cost service to provide proactive maintenance to those facilities and equipment.
In tough times, major oil and gas companies shift to focus on their capital investment project to maintain and optimize what they already have. You should shift your emphasis and focus on offering maintenance service-type offering to guarantee their uptime and optimize their productivity.

4.Venture into road fuel transportation business
If you remember, your secondary school Biology subject says, “Movement is the quality of living things,”

So following the increasing demand for petroleum products (for example, premium motor spirits, diesel, kerosene, and other petroleum products) in Tanzania East Africa, and Central Africa. Starting a business that focuses on moving petroleum products from oil depots to the desired destination across the country and landlocked neighboring countries in East and Central Africa, including Burundi, Rwanda, DR Congo, Zambia, Malawi, Uganda, and Kenya, can be a lucrative investment.

 

I hope this helps.

 

Whether you are new to the fuel industry, add to your portfolio of fuel stations, or look to buy fuel stations that already exist in the market. Selecting the right location for your fuel station is crucial to maximizing profit and ensuring your business’s long-term success.

People make the biggest mistake: they purchase land and rush into the building or buying petrol station without doing solid homework.

They spend a lot of money, time, and effort building or buying a petrol station only to find that the station is selling a little volume from the market in trading areas. They are losing investment time and effort.

So if you are thinking of opening a new petrol station, here are some steps in ensuring you make sound investment decisions.

1.How much fuel volume you expect to sell per month in the trading area?

Determine the quantity and type of cars and vehicles per day passing in your location.

By collecting traffic data, you will estimate the fuel volume that you expect to sell in your trading areas and project the monthly fuel volume that your location might sell. This will also identify whether there is an opportunity to achieve greater volume in the future. It would also aid you in determining the underground fuel storage tank’s capacity to buy for your new site.

2.Who are your competitors?
It is crucial to understand who are your closet competitor are you trading areas and identify their strength and weakness and what volume they are achieving.

If there already other petrol stations existing in the same trade area, Identify what volume they are achieving. You may also need to identify the competitive advantage your new site could gain on its fuel volume. To collect competitor information, visit their sites and gather bits of intelligence from their pump attendants.

Finding reliable market expertise can be complicated and time-consuming. Furthermore, gathering competitor intelligence is particularly difficult and daunting.

The good news is that there is a reliable source that can give you all market knowledge, expertise, and insight to empower your decision-making and improve the operational performance of your new sites and station.

In a competitive bidding environment in Tanzania and East Africa petroleum market where numerous companies are bidding on one project, it is vital to continuously collect reliable market intelligence on your opportunity, competitors, and customers. This will support the qualification process and reassure you that you target the right opportunity that has the likelihood of realization.

Although the East African oil and gas industry has already survived the covid-19 pandemic, project owners still want to improve their production target and develop their project with minimum capital investment and resources.
What you and your company should ask yourself critical questions before bidding for the project?

Competition: Who else is bidding on this project, and what are your chances of winning?

Bidding cost: What are the budget and estimated bidding cost?

Execution capability: Do you have the capability to execute the project profitably?

Local content requirement: What is the local content requirement in the host country? Can you find skilled local personnel and local suppliers to deliver the project on time and within budget?

Answering these questions would help you target the right opportunities, increase your success rate, and reduce the risk of pouring your time and effort into a project with no likelihood of realization.

The growing demand for fuel in the Tanzania and East Africa region has significantly influenced the region’s fuel operators to increase number of fuel stations.

With the government urging to meet the growing demand, operators are already working to achieve the targets.

The petrol station builds a training course to help existing investors and new investors achieve their strategic growth by providing based fact analysis and help you reduce risk and get a high return on investment.

In this course, participants would learn

  • Three ways to start a filling station business in Tanzania, and the easiest among them.
    How to design petrol station of the future.
  • Operating procedures and documentation required for building and maintain petrol station business in Tanzania(Including the steps and processes and cost to obtain licenses and permits to set up a petrol station.
  • How to undertake due diligence on your location to determine whether your location/land is profitable and how much volume you expect to extract from your trading area based on existing competitions, traffic analysis, and future development, etc
  • The factors determining the profit margin of petrol stations.
  • The breakdown of the project cost and capital required for building a petrol station.
  • How to prepare a bankable petrol station business plan for raising capital
  • The equipment and machines you need to have a complete filling station, their prices, and where you can buy them.
  • The marketing strategies you should employ for your station to attract more customers and build customer loyalty.
    How to find the right contractor for building your petrol station

Who this is for

  • Top and Middle Management Staff of companies and individuals interested in diversifying and starting a lucrative petrol station business.
  • Project managers of the oil marketing companies interested in increasing number of the petrol stations
    Project engineers and consultants.
  • Individuals or entrepreneurs are looking to improve their knowledge and intelligence about planning and starting profitable petrol stations.

Booking Details 

If you are interested in this course, please contact us via +255(0)655376543 or info@tanzaniapetroleum.com