If skillfully managed, petrol stations can produce impressive results for investors and entrepreneurs who aim to diversify in order to have another income stream.

But what is most needed to start, survive and be good in a petrol station business?

A simple talk with experts will tell you, you need capital, and more. Money are essential. But capital without clear path to profitability can lead to struggling petrol station business. Capital  can not turn failing petrol station business into strong business.

Information is the only thing you need to start and stay in the petrol station business.

Information is a lot more worth than money itself. One will not stay in petrol station business very long without information.

Only after you have information about the market size, customers, strengths, and weaknesses of your nearby competitors, regulatory requirements, pricing structures and even  growth trends will you be able to correct actions that may hurt you or your business.

Only well-informed investors with great ideas will survive in this competitive petrol station business.

With the growing population coupled with the improved infrastructures, The oil and gas (energy) sector is still growing and constantly changing, shaping the economic growth of the twenty-first century and bringing opportunities to those who know where to look. This article will enlighten you on the industry events of 2023.

1. Local entrepreneurship will grow in the petroleum sector

A few years ago, investors and local entrepreneurs in Tanzania and Africa made money in mining, building, agriculture, manufacturing, and real estate. Now, local capital created through real estate, construction, and manufacturing is moving to the energy sector. local entrepreneurship is growing in service stations, dealerships, lubricants, and LPG sales. This trend will increase even further in 2023.

2. Challenge in finding talents for energy projects.

There is plenty of people willing to work in Tanzania and Africa. They love to work in oil and gas(energy) projects. They love to move forward with their families and their countries. But there’s a skills gap. The lack of reliable certification makes it difficult for employers to find the needed staff. This will affect energy start-ups. The debt and family obligations that Tanzanian staff have outside the workplace often make working for a start-up less attractive than a more reliable job in a large company or a government position.

3. Clean cooking fuel will be the next thing to sweet potatoes in Tanzania.

Due to depleting natural reserves like woods and charcoals, continuous enforcement of regulatory norms, and increasing awareness towards eco-friendly products, LPG has evolved as the primary cooking energy source in Tanzania and Africa.

Initially, the distribution of LPG was continued to urban areas only, but with rapid changes in the living condition of society, the requirement for LPG is increasing very steeply. Now the rural population is also starting to consume LPG.

4. Technology is going into renewable energy,

In Tanzania and Africa, we can only do with the issue of renewable because we have huge potential that we need to harness. We have Solar, Wind.

When we were kids, we all knew electricity came from the Ruvu river, which is hydro. And now we know that our sun is being tapped into solar energy. Technology is going to that sector. 

5. Entry of new foreign investors into the energy sector

With Tanzania’s oil and gas (energy) sector undergoing a massive change in structure and worth, new investors and companies will take part in growth energy opportunities. Because now they know a stable government will never create period chaos. Also, as the country builds a reputation as the next energy hub in East Africa, Local and international investors want to put money in the region to leverage the growing energy demand.

6. Lack of sufficient funding will delay the region’s oil and gas(fossil fuels) project.

Due to activist pressure, certain commercial banks refuse to finance oil and gas(fossil fuel) projects. Look what is going on in Uganda and Tanzania. Certain commercial banks such as Deutsche Bank, Citi, and Société génerale not finance the EACOP project. Tanzania and East Africa need to increase their energy supplies. We need more funding to come into the energy industry to accelerate the development of oil and gas pipelines, gas plants, and exploration projects.

What makes millionaires while others give up or become bankrupt in the same petrol station industry?

Why are investors building new petrol stations on every street corner in Tanzania? And why many petrol stations are being advertised for sale on the internet and in newspapers?

It breaks my heart to say that due to a lack of adequate information about investing in petrol stations in Tanzania and Africa, most potential investors take the plunge without sufficient due diligence and foreknowledge of the challenges of operating a petrol station business in the region.

Many potential investors are so blinded by perceived big money opportunities in the energy sector that they pay less attention to the industry’s challenges.

After the business commencement, they soon discover a totally different world from what they thought it would be.

Due to this reality, the research outcome has added value to the domain of much-needed investment information for decision-making.

If investors know from the independent source what challenges exist, they will embrace challenges and learn how to navigate them.

Based on my experience and research, here are six causes of most petrol station business disasters.

1. Poor site location
Location is a crucial factor that impacts the profitability of l your petrol station business.

Today, many investors spend substantial time and resources on executing their petrol station projects while they need to pay more attention to assessing the viability of their petrol station site location. This leads to investing in the wrong places or making a decision that may not help them win in this competitive market.
A good petrol station site location has better accessibility and visibility to customers. Another essential location factor that could affect the fuel demand is the number and type of vehicles passing in your site. Also, determine who your competitors are, their strengths and weakness, how much volume they sell per month, and their pricing strategies.

2. Lack of financial discipline
The petrol station is a cash business, so the temptation to misplay earning is high. Investors and operators must have a high financial discipline to survive in the industry.

3. Poor risk management
As I said earlier, the petrol station is a high cash business, and the potential for theft is high. Also, petrol stations operate nonstop, like hospitals or airports. Anybody can enter the petrol station and go scot-free, including criminals.

Thieves and criminals are the greatest enemies of your petrol station business. They ruin the profitability of the petrol station business. Another sad reality is that everyone wants to steal from you. They must be your employees or customers who drive away without paying for fuel that had just been refilled into their tank. To minimize risks, stop holding a lot of money in the office at all times.

Also, ensure you have a security mechanism that detects terrible incidents like this in your station, such as an alarm or CCTV.

Furthermore, the potential for fire outbreaks in the petrol station is high because fuel is highly flammable. To minimize this risk, ensure safe operate and have adequate insurance. Furthermore, you must employ smart operation strategies to avoid losing fuel during loading or dispensing fuel to motorists.

4. Low-profit margin.
Currently, there is a proliferation of petrol station development in Tanzania. Competition for the trade of motorists is higher. Also, there are challenges of low-profit margin.

If you are a petrol station owner dislikes incorporating complementary services like a car wash and garages, or even if you need more non-fuel products, your petrol station will suffer years of slow growth. You must also push high fuel sales at your petrol station to maximize profitability.

5. Lack of vision and plan

Many investors are fast in implementing their petrol station project, but they need the plan to make their effort successful. To survive or even excel in the petrol station business, you need to have a vision of where you want to be at a specific time. You need to know how to manage and plan and influence business direction,

6. Lack of understanding of the market dynamic
The significant challenges in petrol station operation are sales and purchase differences. Maybe you buy fuel when the price is high. Because of fuel price fluctuation, you have to sell for less due to market conditions. And it can be vice versa too.

So in the petrol station business, you must observe the market very minutely. You must determine the rate fluctuation ahead of time. It will help you buy and sell fuel. When you discover the fuel price will be high, you must have sufficient fuel stock. And you must finish the stock quickly when you realize that fuel price is going to drop.

To survive and excel in the petrol station industry, you need to focus on building profitability, financial discipline, risk management skills, and vision for the business. Don’t forget to have faith in God.

Like other petroleum products, Lubricant oils keep Tanzania moving. Without lubricant, all equipment, machinery, and vehicles will eventually stop.

Lubricants are essential to ensure that various machines operate smoothly and do not fail prematurely to minimize operational costs in any organization that uses such devices.

Lubricant Market Size in Tanzania

In Tanzania and East Africa at large, lubricants are either blended/manufactured locally through imported feedstock materials or imported as finished products. The consumption of Lubricant in Tanzania has continued to increase at an average rate of 12% per year, and it is most likely to continue to grow.

What Estimated is the Estimated Investment Costs for a Small Lubricant Plant?

A typical Lubricant blending plant with a capacity of about 1,000 liters per six hours may cost between 60,000US$ and 80,000US. The cost involves mechanical and civil works, electrical costs, machines, and lands.

The LPG business is growing exponentially in Tanzania, With a consumption growth rate of 12 percent per year.

There are many regulatory requirements for LPG firms to operate in the Tanzania market. The requirements can vary significantly from agency to agency.

This article will focus on some of these requirements so that you can avoid costly mistakes and operate a successful LPG business and company.

What Are The Licensing Requirements for LPG Business?

The Energy and Water Utilities Regulatory Authority (EWURA) regulate LPG business in Tanzania and oversees all LPG business activities.

To start the LPG plant, you must contact for construction and operational licenses.

Other government agencies that also have a specific regulatory mandate in the LPG Occupational Health and Safety Agency (OSHA), Weight and Measure Agency (WMA), Fire and Rescue Forces, Government Chemist Laboratory Authority (GCLA).

Read also:   Investment Profile/Feasibility Report For Small LPG Plant in Tanzania

OSHA is responsible for ensuring your LPG facility complies with safety requirements in protecting people from harm. Through assessing the existing risks.

You will also need to approach municipal Councils to obtain a business license to operate your LPG business.

Also, there is the Tanzania Bureau of Standards (TBS) which develop LPG standards/specification for product and infrastructure, including involving equipment (such as cylinders and accessories) and ensuring that the product that is imported meets the required set standards.

Furthermore, you will need to conduct an environmental impact assessment( EIA). Through EIA, you can obtain an EIA certificate, which is mandatory by law for any project or investment.

I hope this helps.