Key Factor to Stay Competitive In Lubricant Blending and Manufacturing Business in Tanzania and East Africa

The lubricants market in Tanzania is growing fast and getting more competitive. Consumers have more choices with the proliferation of new lubricants in the market.

In this ever-changing market, lubricant manufacturers/blenders and marketers must focus on the base stock quality they use to compete and comply with enormous regulatory and local and international standards.

In recent years, vehicle ownership has increased in the region.And with the increasing of used vehicles, using group 1 base oil is vital in manufacturing various types of high-quality lubricants(engine, hydraulic, gear, industrial, greases, etc)

Is There A Future For Petrol Station in Tanzania?

By Hussein Boffu

The petrol station is a resiliency opportunity, albeit capital-intensive, due to the nature of its assets.

The population of this country is growing. The number of cars on the roads is increasing. So our economy and people need more fuel.

Demand for conventional fuels (such as diesel, petrol, lubricants, and LPG) will remain for decades.

Unlike Europe, where the filling station investors make most of their money from non-fuel products like drinks and foods.

The petrol stations in Tanzania make most of their money from fuel up to 60 to 80 percent depending on the locations.

For urban sites, non-fuel products will become increasingly relevant in convenience retail, food service, car wash service, and other ancillary offers.

Like in any sector, the challenges are there, but the way we approach the challenges is by focusing on opportunities and making the right decision.

The first issue is declining in sales volume. Regulators fix the margin. And there are  proliferation of new petrol station brands in the market.

In many sites nationwide, most petrol stations sell based on cost leadership and heavy discount. This reduced sales volume, which in turn led to reduced revenue.

The other challenge is navigating onerous regulations and industry standards. The petrol station is a unique sector.

Many regulations need to be fulfilled to run successful petrol stations.

Another area for improvement is the supply chain. We know that we need to ensure the constant availability of fuel in the stock.

However, we know that with a well-planned location, a clear understanding of consumer demand, and employ aggressive marketing strategies, you can navigate this complex industry and walk like a winner.

With this scenario playing out daily, petrol station owners need well-planned locations proximate to demand.

Also, non-fuel products and services development like food services, restaurants, mini supermarkets, coffee shops, car washes, garages, and other complimentary services.

That’s the future of petrol station owner-businessmen who wear many hats in an ever-changing business environment.

Promoting the Use of Liquefied Petroleum Gas (LPG) in East Africa.

. By: Eng. Amos Jackson Mwansumbule.
Executive Director of Tanzania LPG Association, CEO & Founder of Sarojoah Enterprise Company Ltd, and Published Author.

Energy is one of the important end products of various forms of matter thus, solid, liquid,
and gaseous materials. Energy drives the world’s economy and indeed, each country’s
economy.

The type and amount of energy produced and used in a given country may
define or indicate how advanced the economy and general well-being of the society in that
country is.

The most indispensable use of energy is cooking food, and because food is one
of the most basic needs of a human being, cooking energy is the most important one
because it is for people’s lives.

It, therefore, makes sense to pay special attention to cooking energy sources, especially “clean sources .”In East Africa and, of course, most sub-Saharan African countries, the most used source of cooking energy is biomass, thus fuelwood, charcoal, and paraffin (kerosene).

These types of sources of cooking energy are used because they are easily accessible, affordable, reliable, and traditionally known.

Other energy sources, such as electricity produced from different sources (non and renewables), seem to have trilemma challenges (especially in rural areas) such as accessibility, affordability, and security/reliability and may therefore take some time before such challenges are addressed.

Another efficient source of cooking energy for East African countries could be natural gas.

However, natural gas is produced in Tanzania and,to some extent in Rwanda, and it has a challenge of requiring significant distribution costs.

It is understood that all East African countries ratified the UN 17 GOALS – Sustainable Development Goals (SDGs), including GOAL No.7: “Ensure access to affordable, reliable, sustainable and modern energy for all .

“According to WHO and Clean Cooking Alliance Organization, air pollution is a leading environmental risk where about four million (including about 450,000 children under five years) people succumb to dirty fuels per year.

Furthermore, about 16% of air pollution globally comes from household air pollution caused by dirty fuels, which contributes to respiratory diseases.

climate change effects such as drought, floods, hurricanes, storms, tsunamis, et al., are also caused by using biomass through deforestation and carbon footprint production.

Due to the adverse effects of biomass, it is therefore important that biomass is replaced by an alternative source (s) of cooking energy, and given the challenges other sources have, as explained above, Liquefied Petroleum Gas (LPG) is currently the most compelling solution to biomass in East Africa.

LPG product is produced along with other hydrocarbon products such as petrol, kerosene, diesel, etc., through a refining process of crude oil or natural gas by separation process.

Crude oil and natural gas are naturally formed under the earth in special rocks, and their sources are believed to be dead and longtime decayed living organisms (animals and
plants).

LPG is an efficient source of cooking energy due to its key properties, such as; the production of a lower level of pollutants (carbon footprint) than biomass, and it has relatively higher energy content compared to biomass – thus, you can use less equivalent units (equivalent unit of electricity in KWh or Kilogram of charcoal versus Kilogram of LPG) for cooking similar type of food under the same conditions than biomass.

Another benefit of using LPG is that it saves time, is more convenient (flexible) than biomass, and does not deposit soot on the surface of the cooking utensil and kitchen walls or surroundings
.  Lastly, LPG is filled in portable cylinders that can be transported to rural areas, making it more accessible to consumers.

Despite such LPG benefits over biomass, research done in 2022 by African Insight Advisor Organization (AIAO) in Tanzania indicates that most population uses dirty fuels and only about 1% of the rural population uses Liquefied Petroleum Gas (LPG), a cleaner source of cooking energy than biomass, compared to about 54% in urban areas.

The relatively low use of LPG in rural areas, according to AIAO, is due to low limited
accessibility of LPG, low awareness, and affordability challenges.

LPG consumption in East Africa has been growing exponentially, especially in Kenya, Tanzania, and Rwanda, where the annual growth has been at least 15%.

However, compared to other African Regions, such as North African countries where per capita consumption is more than 20 Kg per person per year, LPG per capita consumption in East Africa is relatively low.

Kenya is leading at about 6Kg per person per year, followed by Tanzania and Rwanda at about 2.5Kg per person per year and Uganda as well as Burundi having less than 2 Kg per person per year.

Low LPG penetration and consumption in East Africa has been due to relatively limited accessibility due to inadequate investment in LPG infrastructure network within the supply chain (port facilities to handle big LPG ships, receiving and storage terminals, roads, remote cylinder filling plants).

However, there has recently been a steady increase  Another challenge has been the low level of awareness of the benefits of LPG products to consumers against the perception of safety risks which many consumers may have a negative view of and therefore discouraging them from using LPG even for those who can afford to use it

. There has also been a challenge of affordability, considering that many communities in East Africa live below the UN poverty line and that LPG products and related equipment are almost 100% imported from outside the region.

Therefore, it is essential that some transformational initiatives are formulated and rigorously implemented to stimulate LPG consumption in East Africa further, and these should be done jointly between the government, private sector, and other stakeholders.

The governments should lead by urgently coming up with fit-for-purpose effective policies, laws, and campaigns that encourage societies to shift from dirty fuels to modern energy sources such as LPG, work with the private sector to identify key investment incentives to attract more investment in LPG sector (such as removal of taxes on the product, facility equipment, cylinders, and accessories), ensure motivating regulatory framework is in place especially on technical specifications and trade competition compliance, sustainably protect both consumers and investors as well as put in place
impactful transparent monitoring review and control mechanism.

In addition, governments should, through relevant data management systems and decision-making (identification, collection, storage, analysis, interpretation, and reporting), understand the cost spent as a result of household air pollution diseases’ treatment and drought incidents management, which are caused by the use of biomass that causes deforestation and compare that against the cost will be required to subsidize LPG prices to increase the level of penetration and consumption.

One of the hypotheses that can be tested is; “it takes a relatively lower cost to subsidize LPG prices to increase the population that uses LPG than the cost spent to treat people suffering from household air pollution-related diseases such as respiratory and visual as well as drought incidents caused by biomass use.” If this hypothesis is valid, which I believe it is, East African governments will need to subsidize LPG prices, especially for low-income earners, to swiftly, increase the use of LPG over biomass.

Drilling and Well Cost Optimisation Using Digital / Smart Technologies

By Naim Saddiq CEng, Managing Director: Oxford Well Engineering Limited

With the global oil and gas industry gearing up for action, a vast number of drilling & completion projects are being pushed through the initial planning (FDP) and FEED gates.

In the backdrop of current global energy crises, there is considerable time pressure to deliver reliable energy as soon as possible.

We must, however, remember to guard against common costly (wells) mistakes, which have historically resulted in huge sunk costs arising from overly expensive and/or poorly constructed suboptimal wells.

A lot of wells, which were constructed cheaper had to be worked over within the first few years which should not ideally be the case.

For future wells, it would be prudent for smaller E&P companies to engage “Well Optimisation Expertise” which could be visualized as a thread passing through ALL drilling project layers, thus yielding best results for the wells project costs.

From our experience, we noticed that most large operators tend to drill complex wells a lot cheaper compared to smaller operators even with similar designs and experienced people onboard.

Their success could be primarily attributed to extensive upfront well planning and design optimisation which is usually followed by data-driven, expertly controlled well project executions. In a nutshell, wells teams need to get it RIGHT the very first time.

Once the design is finalized, the well cost is written in stone even with best of drilling efficiencies you will have expensive wells.

From decades of experience, a road map of optimisation could be furnished which could deliver an all around well cost optimisation through use of digital and well engineering tool in a systematic manner. The road map could be summarised as per figure below:

 

In the road map figure above, it can be highlighted that well cost optimisation must start with specialist tech-based offset analysis which is the most important stage where firm reliable foundation of a drilling project is created. Once that is done, we must let data-driven knowledge and data calibrated engineering analysis to percolate through all layers of drilling project gates/phases.

During the well construction phase, data-driven Real-Time Drilling optimisation must deliver top quartile wells which are constructed cost-effectively, always ensuring that safety and well integrity remains intact.

 

Tanzania LNG Project Gains Critical Momentum

BY: Neil Ford

Tanzania’s Ministry of Energy and Minerals announced in March an agreement with Anglo-Dutch major Shell and Norway’s Equinor to develop a long-awaited LNG project in the south of the country.

The ministry said negotiations had reached a successful conclusion and that a Host Government Agreement is now being drafted, alongside a production sharing contract covering the offshore acreage involved.

There is a long way to go before the project is actually developed, but it has never looked more likely to be built.

A final investment decision (FID) is expected in 2025 with the front-end engineering and design (FEED) phase preceding FID.

Construction time is likely to be five to six years, suggesting the large-scale project could come on-stream around 2030.

Plentiful feedstock Blocks 1, 2 and 4 in the Mafia Deep Basin off the southeast coast of the country will provide feedstock for the plant. Equinor operates Block 2 with a 65% stake, alongside partner ExxonMobil, which holds the remaining 35% equity. Equinor estimates reserves on the block…

Have You a Big Idea?

Have you a big idea? Are your ideas forceful? If they stay with you from day to day. If they give you no rest, night or day

Ideas make a business. Realize that the greatest business- the most extraordinary success- individually and commercially- has started from a simple idea. Ideas are capital. Ideas are growth.

But more than having an idea is required. You must turn it in the right direction.

You must persevere in the right direction once you are confident that you have found the right direction, plus determination will drive success to your petrol station idea.

Determination is crucial in driving the success of your idea.

If a man is in business, let him only be satisfied once the business is grounded in success.

Also, the difference between ideas and lack of them is not so much on the brilliance of the particular ideas.

But reasonably good ideas are concentrated on and carried through implementing such ideas.
Turning your vision into reality can bring tremendous benefits and growth to people and society.

Because I believe the vision denied is growth denied.

Steps to Powerful Health and Safety Management System(HSMS).

By Alex Kasengo. HSE specialist.

Several elements constitute a powerful HSMS, but among these, Leadership Commitment plays a critical role. Without leadership commitment, no resources will be allocated to management HSE.

The presence of the leadership team in the field makes employees and contractors believe HSE is a game for all, not employees only.

Other components needed for a successful HSMS are Health and Safety Plan, policies and procedures, training and competency, risk management, incident reporting and investigation, emergency response and preparedness, etc.

Lastly, monitoring and evaluation are crucial; this will give you a direction where to hear to.

‘If all those elements are put together, they will be like a framework to provide you with a guide to thriving and achievable HSMS.

Tanzania to Review Approval of $42 Bln LNG Project In June

DAR ES SALAAM, May 31 (Reuters) – Tanzania’s government said on Wednesday it had completed negotiations with the investors of its $42 billion liquefied natural gas (LNG) project, with the agreements set to be reviewed for approval next month.

Energy minister January Makamba said the agreements for the approval of the long-delayed project – aimed at unlocking the country’s vast but remote offshore gas resources – would be presented to the government’s cabinet before they are signed.

 

While Makamba did not provide a time frame in his address to parliament, the ministry of energy’s budget speech for 2023/24 published on its website showed the LNG investors and the government are expected to sign an amended production sharing agreement in June.

“The $42 billion project will change the image and the face of our economy,” Makamba said, adding the government would enact a special law to monitor the project.

Earlier this month, Equinor, Shell and Exxon Mobil said they had agreed a deal with the east African country for the development of an LNG export terminal.

Since taking office in 2021, President Samia Suluhu Hassan has been pushing to complete negotiations for long-delayed projects. The LNG project had stalled for seven years.

Separately, Makamba also said the government was planning to increase electricity production from the current 1,872 megawatts (MW) to 5,810 MW by 2025/26 to meet increased demand.

“This has considered the contributions and importance of the ongoing energy projects from different sources … with great consideration of the private sector,” he said. (Reporting by Nuzulack Dausen; Editing by Bhargav Acharya and Mark Potter)

Four Imperative Actions You Need to Take to Master and Navigate Complex and Competitive Retail Petrol Station Industry in Tanzania

The fuel retail sector is a growing market in Tanzania and East Africa. As the market grows, petrol station operators and entrepreneurs are in serious trouble because of a sudden surge of competition from new entrants.

In many sites nationwide, most petrol stations sell based on cost leadership and heavy discount. This reduced sales volume, which in turn led to reduced revenue.

The most pressing question is what petrol stations operators and entrepreneurs can do to build the future they are proud of

Here are some growth strategies to boost sales of your retail petrol station

1.Have aggressive marketing plans.
Most people believe that once you locate your petrol station strategically, there is no need to market it, simply because customers will flock to your station to refill their car.

But that’s untrue. The petrol station business is competitive.

You should develop great marketing strategies to attract new customers to stand out in this crowded market.

Instead of waiting to rely on motorists, recruit business clients near your service station. Also, if you can arrange or undertake an agreement with transporters, you will likely sell a reasonable volume.

2.Increase market share by adding more petrol stations to your portfolio.
Leasing or buying an existing petrol station is the quickest way to grow and thrive in the fuel sector. The more you add new petrol stations to your portfolio, the more you increase revenues. However, you should conduct comprehensive due diligence to ensure the viability of the acquisition.

3.Recruit the right salespeople and managers.
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 fuel 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. So hiring experienced people and conducting regular in-house training ensures that employees carry their duties with the required service level.

4.Add more products to your petrol station.
Instead of just offering diesel and petrol, consider selling other fuel products. Forexample, lubricants(engine oils) is fast moving selling products at a petrol station. Also, people buy liquefied petrol gas(LPG) at petrol stations. This will drive more revenue to your site.

I hope this helps.

How the Best Entrepreneurs Can Weather the Culture of Criticism In Tanzania?

Tanzania is a good country. Resources and opportunities are abundant. Tanzanians are knowns as kind and friendly.
But if you have been living here for a while. You will realize that there is a culture of criticism.

From friends and family who mock you or trampled your dreams.

A colleague who gives you negative comments such as You know nothing about that industry.

And towards strangers who criticize your business or even products on social media.

We live in the erroneous belief that, somehow your success is a threat to us.
How can you handle doubters, haters, and critics and strive for success as entrepreneurs in Tanzania?

1.Identify the people you can trust who have the best interests at heart and good judgment.

Criticism can lead to demanding belief in yourself and hold you back. The first thing is to believe that you are capable.
Believe that you have unique abilities, gifts, and potential. You can be all you can be without applause from friends, family, or coworkers. Also, identify like-minded people who can spread positivity and who will support you, provide sound insights and succeed together. No one is an island We need one another. We succeed together.

 

2.Focus on the impact of your idea or business project.
As mentioned earlier, criticism can hold you back from pursuing your dreams and accomplishments.

So instead of focusing on the negative comments from critics, focus on the impact and growth of the people and society because of the success of your idea or business.

Think how many lives you will transform through your products and services. Think about the number of people who will be able to take care of their families because of good jobs from your business.

3.Ignore all Critics.
There is no need to compete or prove to anyone that you are good enough. If you are passionate about what you do, and you have conducted comprehensive due diligence, and have access to capital, ignore all the negative comments and you will build something that matters.

I hope this helps. Let’s stand together, and work to build the future that we are proud of.