The Future of Lubricants(Engine Oils) Market in Tanzania

/in /by

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

Lubricants are substance usually in a liquefied form that is introduced between two moving parties to reduce the friction between them, thereby improving efficiency and reducing friction.

Friction is what you get when you rub your hands together. Your hands get warmed when you tickle them because of friction.

There’s always friction when the two objects in contact rub against each other. But there are a lot of parts moving over each other in machinery, engine, and the rest of an automobile, so there’s a lot of friction, a lot of wear, a lot of heat.

Market Outlook

The lubricant oil sector is divided into two main segments: automotive and industrial.

The automotive sub-market of the lubricant oil industry holds 60% market share, and the industrial sub-sector has 40% broadly; the lube market is segmented into five regions. These areas are Tanzania, Asia Pacific, Europe, North America, The Middle East & Africa, and South America. The Asia Pacific is the largest market for lube, followed by Europe.

The industry project that India’s automobile lube oil market will reach $ 9.6 billion by 2022 in the future also. Another primary reason is growing consumer awareness regarding engine oils, and other lubricates’ use and advantages.

In the automotive segment, cars, two-wheeler, and three-wheeler segments account for 40% of the market; however, diesel-operated engines, trucks, and other heavy vehicles have the bulk share of the rest, 60%.

The increasing number of passenger and commercial vehicles in the region is fueling the growth of the lube market; hence, starting a lubricates manufacturing business is a highly lucrative business for entrepreneurs who want to start a business in the growing lubricant industry in Tanzania and Africa.

Furthermore, The lubricant manufacturing industry is a string sector economy of Tanzania, and the industry generates over $ 8 billion annually from more than lubricant plant blending and manufacturing companies scattered all around Tanzania. The sector is responsible for employing over 17,043 people experts project the industry to grow at a 2.8 percent annual rate.

How to Start an LPG Refilling Plant in Tanzania and Africa: Key Insights and Business Guide

/in /by

The demand for Liquefied Petroleum Gas (LPG) in Africa is growing at an unprecedented rate. With its numerous advantages over traditional fuels like charcoal and firewood, LPG has become a vital source of energy for cooking, heating, and even industrial purposes.

In Tanzania and many African countries, the rise in LPG consumption presents a lucrative business opportunity: starting an LPG refilling plant.

LPG refilling plants play a critical role in ensuring the efficient and safe distribution of LPG to consumers, businesses, and industries.

Whether you are considering starting a plant in Tanzania or expanding operations to other parts of Africa, this blog post will guide you through the essential steps, challenges, and opportunities involved in setting up an LPG refilling plant in the region.

Why Start an LPG Refilling Plant in Tanzania and Africa?

  1. Rising Demand for LPG

As African countries like Tanzania continue to urbanize, there’s a growing demand for cleaner, more efficient cooking and energy solutions. LPG’s benefits—such as its affordability, clean-burning nature, and environmental advantages—are becoming increasingly recognized. Governments are also offering subsidies and incentives to encourage the transition to LPG. This creates a prime opportunity for businesses to enter the LPG supply chain, particularly in refilling plants that cater to both residential and commercial customers.

  1. Government Support and Energy Policies

Many African governments are supporting the LPG sector through favorable policies aimed at increasing adoption, improving access, and reducing dependency on traditional fuels. For example, Tanzania’s government has been promoting LPG as a sustainable alternative to firewood and charcoal, which not only helps the environment but also boosts local economies. By setting up an LPG refilling plant, you can benefit from these policies while contributing to national development goals.

  1. Limited Local Infrastructure

While LPG consumption is on the rise, many regions still face significant challenges in accessing reliable refilling services. Tanzania and several African countries have limited infrastructure for LPG distribution, which means there’s a growing market gap. By setting up an LPG refilling plant, you can bridge this gap and provide an essential service to both residential and industrial customers, helping to meet the increasing demand for LPG.

  1. Environmental and Health Impact

As countries move toward cleaner energy solutions, LPG is seen as an ideal alternative to kerosene, firewood, and coal. By establishing an LPG refilling plant, you contribute to the health and environmental goals of the country while creating a sustainable business model. This also allows you to tap into the growing global trend toward eco-friendly energy solutions.

Steps to Start an LPG Refilling Plant in Tanzania and Africa

1.Conduct Thorough Market Research

Before starting your LPG refilling plant, it’s crucial to conduct in-depth market research. Identify the specific areas with high demand for LPG, analyze competitor businesses, and assess customer needs. Understand the consumption patterns and purchasing behaviors of both residential and commercial customers, and pinpoint regions with inadequate supply chains. This information will help you make informed decisions about the plant’s location and operational scale.

2.Comply with Regulatory Requirements

The LPG industry is heavily regulated due to safety concerns and environmental impacts. In Tanzania, the Energy and Water Utilities Regulatory Authority (EWURA) oversees the LPG sector, setting strict guidelines for plant construction, safety standards, and operations. Be prepared to obtain the necessary licenses and permits, including safety certificates for handling, storage, and distribution of LPG. Failure to comply with regulatory requirements can result in fines, delays, or even business shutdowns.

  1. Choose a Strategic Location

The location of your LPG refilling plant is crucial for its success. Ideally, your plant should be situated in an area with easy access to transportation routes and close to residential or industrial areas where demand for LPG is high. Proximity to LPG storage facilities and refilling stations is also important. Consider areas that lack existing LPG refilling infrastructure or those experiencing rapid urbanization where demand for LPG is expected to increase.

  1. Secure Financing and Investment.

Starting an LPG refilling plant requires significant investment in infrastructure, machinery, storage tanks, safety systems, and staff training. Depending on the size and scope of your plant, the costs can range from a few hundred thousand dollars to several million.

To secure funding, you can approach banks, private investors, or even government-backed programs offering incentives for clean energy businesses. Develop a solid business plan with clear financial projections to convince investors of the plant’s long-term profitability.

  1. Install the Right Equipment

The main equipment needed for an LPG refilling plant includes storage tanks, refilling machines, compressors, and safety devices such as pressure relief valves, emergency shutdown systems, and gas detectors. Depending on the scale of your plant, you may also need bulk storage tanks, filling units, and cylinder transportation vehicles. Ensure that all equipment complies with national and international safety standards and that staff are trained to operate it safely.

  1. Build Strong Supplier Relationships

Your plant will rely on a steady and reliable supply of LPG, so it’s essential to establish strong partnerships with reputable LPG suppliers. These suppliers could be international or local refineries, which will provide you with the raw LPG needed for refilling. Negotiate pricing, delivery terms, and supply agreements to ensure consistent and competitive pricing for your customers.

  1. Implement Safety Standards.

Safety is a top priority when handling LPG. Ensure that your plant is built with all the necessary safety measures, including well-ventilated storage areas, explosion-proof equipment, fire suppression systems, and spill containment measures. All employees must receive training in emergency response procedures and safety protocols. Regular safety inspections should be conducted to ensure the plant remains compliant with safety regulations.

  1. Develop a Customer-Focused Marketing Strategy

Once your plant is up and running, the next step is to create a marketing strategy to attract customers. Focus on educating your target audience about the advantages of using LPG, such as its cost-effectiveness, safety, and environmental benefits. Offer special promotions for first-time customers or bulk buyers. Leverage online platforms, local advertising, and partnerships with gas stations or retailers to raise awareness of your services.

 3: Challenges in Starting an LPG Refilling Plant

1.High Initial Investment

The initial capital investment for setting up an LPG refilling plant can be significant. In addition to purchasing equipment and setting up infrastructure, you must also account for operational costs such as raw LPG purchases, labor, and marketing. However, the long-term revenue potential from a well-placed, efficient plant can outweigh these upfront costs.

  1. Supply Chain Disruptions

The LPG supply chain can be volatile, particularly in regions with underdeveloped infrastructure. Disruptions in the delivery of LPG or delays in shipments can affect your ability to meet customer demand. Building strong relationships with multiple suppliers and having contingency plans for supply chain interruptions can help mitigate this risk.

  1. Safety and Environmental Risks.

Handling LPG involves safety risks, including fire hazards, explosions, and leakage. To minimize these risks, you must implement stringent safety protocols, invest in regular safety training for employees, and comply with environmental regulations to minimize the impact of your operations.

  1. Competition

The LPG refilling business is becoming increasingly competitive, with both new entrants and established players vying for market share. To stand out, you need to focus on offering superior customer service, reliability, and pricing strategies that attract and retain customers.

 How to Succeed with Your LPG Refilling Plant

  1. Invest in Staff Training

The safety and success of your LPG refilling plant depend on the knowledge and skills of your employees. Ensure that all staff are trained in LPG handling, safety protocols, and customer service. Continuous training programs will ensure that your staff remains up-to-date with the latest industry best practices.

  1. Optimize Efficiency and Safety

Continuously monitor your plant’s operations to ensure optimal efficiency and safety. Regular maintenance, inventory management, and process optimization can help reduce downtime and operational costs, ultimately improving profitability.

  1. Build Brand Loyalty

Building trust with your customers is key to growing your business. Offer loyalty programs, referral incentives, and excellent customer service to ensure repeat business. Also, maintain clear communication with customers regarding supply availability, delivery times, and safety measures.

Read also:Market Feasibility Study For Small LPG Plant

Conclusion:

Starting an LPG refilling plant in Tanzania and Africa offers a significant opportunity to tap into the growing demand for clean, affordable, and efficient energy. By following the right steps—market research, compliance with regulations, securing funding, and ensuring safety and operational efficiency—you can build a successful and sustainable business that meets the growing energy needs of the region.

Are you ready to start your own LPG refilling plant? Get in touch with us today to get expert advice on business planning, securing financing, and navigating the regulatory landscape to ensure the success of your venture.

Why Investment is Needed to Utilise LPG Potential

/in /by

 Tanzania potentially offers one of the largest markets in Africa for liquefied petroleum gas (LPG) pending the various barriers for uptake that imply limited market-based development among the low-income earners and rural dwellers forming the most of the country’s population.

Government policy on energy has set a target of 75 percent of the population to have access to clean cooking technologies and identifies LPG as the right fuel to use.

This is why Mr Hussein Boffu, an independent business support provider in the oil and gas (energy) industry is of the view that the market is crying for more investment due to its potential for LPG products.

Speaking exclusively to The Citizen, Mr Boffu said that: “The annual LPG consumption in Tanzania has grown from 5,500 metric tonnes in 2005 to 145,800 metric tonnes in 2019, yet it still has one of the lowest per capita LPG consumptions in Africa.”

According to him, there are more opportunities for LPG value chain for entrepreneurs and investors who are looking to address supply constraints in the domestic market which includes LPG refilling points countrywide as well as establishment of local LPG cylinder manufacturing units.

Mr Boffu was of the view that due to huge demand; LPG cylinders have become scarce resources in the country yet importing ready-made cylinders is expensive which, according to him, adds the cost to the end user.

“Why import expensive ready-made cylinders from somewhere yet we can produce our own? Why should Tanzanian businesses be searching for the said products in India and Turkey? The production of cylinders locally is of great importance and that the government should create an enabling environment for its investments,” he remarked.

He added: “For instance, with the fuel subsector, the government is now encouraging the construction of filling stations in rural areas but offering start-ups capital ranging to Sh50 million, this must be extended to the country’s LPG industry.”

According to him, if cylinders were locally manufactured, then they would serve the country’s rural community well, which in turn would ease their burden when it comes to accessing clean cooking energy, as the product would be affordable.

Mr Boffu added: “The government should provide and sustain incentives, including tax holidays to potential cylinder manufacturing firms, to make cylinders more affordable and available for everyone thus making a huge difference to the country’s economy.’’

Latest data available at the Energy and Water Utilities Regulatory Authority (Ewura) showed that Tanzania has come a long way, over the past decade LPG supply for household cooking has increased steadily from less than 20,000 metric tonnes in 2010 to more than 145 000 metric tonnes in 2019.

Moreover, the demand varies across mainland Tanzania, for instance, while Dar es Salaam, Coast, Morogoro and Tanga regions, represents 50 percent of the country’s total LPG consumption, Arusha, Kilimanjaro and Manyara regions consume 23 percent and Mwanza, Mara, Geita, Shinyanga and Simiyu consume at least 12 percent.

A study on the potential of increased use of LPG for cooking in developing countries commissioned by the Norwegian Agency for Development Cooperation (Norad) suggested that in Tanzania, the poor spent about 35 percent of their household income on energy while the better-off spent only 14 percent.

The study indicated that currently, there was no national policy with an explicit LPG target, and no LPG promotion programmes under the government.

Therefore, the setting up targets for market expansion of LPG could be a yardstick to attract investors and support progress, including through public awareness campaigns on LPG benefits and safety.

“While the running cost of the fuel is becoming increasingly competitive in urban areas where charcoal prices have increased substantially, LPG requires upfront investment, making the solution unaffordable for lower-income users. Tax advantages and reforms could reduce this barrier,” reads part of the study.

For Norad, the government needs to reduce import duties and VAT for LPG appliances to reduce start-up costs for cylinder and stove as well as restrictions/regulation of charcoal sales. On the other hand, they see pay-as-you-go (Payg) models market openers for low income customer segments.

Moreover, while in the Sengerema District, in Mwanza Region, Mr January Makamba distributed about 80 gas cylinders to encourage the use of clean energy for cooking, saying: “This is a special pilot project which will provide us with data that will enable the ministry to develop a national LPG master plan.” According to Mr Makamba, the said plan will provide a better way for the distribution of LPG in rural areas.

He was of the view that the adoption of LPG required investment in infrastructure (import, bulk storage, transportation, and filling facilities and LPG cylinders) and expanded distribution and retailing networks to ensure reliable and affordable supply and safe delivery to end-users.

Stakeholders in the LPG sub-sector are of the view that households require funds to buy LPG stove and the cylinder, but their income and the pricing of products play a key role in determining which energy source they need to adopt, therefore the need for the government to create conducive environment that would see a reduction cost on cylinders and other accessories, is vital.

If such an environment is created, there’s nothing that can stop companies in the country’s LPG distribution from expanding their reach and transforming the LPG consumption landscape in the nation.

Click here to read full article

Article was written by

Dickson Ng’hily, Jornalist- the Citizen

Six Changes Occurring in the Oil and Gas(Energy) Sectors In Tanzania and What Does that Mean to You?

/in /by

Tanzania’s oil and gas(energy) sector is a continuously changing market. These changes can create opportunities for your business or threaten the performance of your business.

Here are changes that have occurred in the oil and gas(energy) sector in Tanzania and East Africa

1.Increased competition.

As the energy industry grows in Tanzania and East Africa and competition increases, more and more people are finding the industry lucrative and are jumping on it. So the perceived differences between you and your best competitor decrease. 

You are probably feeling increasingly commoditized as clients and consumers view you and your competitors as pretty much the same.

 If you don’t have a dynamic and robust network of support and experts around you, your winning rate may be decreasing. Reduce your margin. And limit your cash on hand.

2.Increased regulations:

Today, the oil and gas industry is confronted by a tidal wave of environmental, health, safety, and local content regulations. The effect of these regulations is to impose demanding new responsibilities on businesses not prepared or qualified to handle them. Failure to comply with these requirements may result in severe penalties or costly litigation. So environmental, safety and local content compliance is a key to having a successful operation of your energy project and company in the region. 

3.The demand for fuel is going up.

The number of people in Tanzania and East Africa is rising. 

Industrial activity is also expanding. There will be a huge demand for fuel to power our economies and industries. There numerous investment opportunities to build new oil and gas facilities, that could add up to the fuel supply in Tanzania.

 

4.Downstream holds key opportunities:  

With rising demand for fuel in Tanzania and East Africa, the downstream petroleum marketing sector creates massive value for the economy, but the opportunities are yet to be fully explored.  

 There are enormous opportunities for further investment to increase the adoption of liquefied petroleum gas(LPG) and other wide-range petroleum products across the region.

Furthermore, The sector offers sustainable business opportunities ranging from starting petrol stations marketing liquefied petroleum gas(LPG) and lubricant oils. The good news is that the entry barrier for entrepreneurs to partake in the sector is relatively lower than in the Upstream(exploration and production) sub-sector of the oil and gas industry.

5.Huge Upstream energy projects are coming online as expected:

It’s amazing to watch how quickly the government is working with the large super majors in joint ventures into the liquefied natural gas(LNG) projects because they know it is prosperous for its people.

They know that for the country to continue its progress in medicine, social responsibility, science, education, and general quality of life, it must ensure an increasing supply of abundant, reliable, and affordable energy. So LNG project means more economic opportunities for companies, local businesses and the community.

 

6.Increased pressure from Energy Transition enthusiasts.

There is a clamor by developed countries to reduce carbon emissions and curb global warming by ending fossil fuels.

This rush to move away from fossil fuels has caused certain international commercial banks to refuse to fund the development of the oil and gas projects and shift the budget to renewable energy projects like solar and wind. So if you are oil and gas  operators you can join the world in dealing with climate change by paying to plant new trees and running renewable energy projects.

Invictus Energy to Drill its Giant Gas Prospect In Zimbabwe- Drilling in a Week

/in /by

Australia’s Invictus Energy is preparing to drill the largest gas prospect in onshore Africa. The drilling project will result in huge gas discovery in the region that is sufficient enough to supply gas-hungry South Africa or even to build a new Zimbabwe oil and gas industry

                               Drilling is expected in August

Mobilisation of the Exalo 202 drill rig had completed from Songo Songo Island in Tanzania to Cabora Bassa Basin in Zimbabwe.
Furthermore, the first batch of equipment arrives on-site in Zimbabwe, and the drilling program is now expected to happen in August.

 

                                Well service contract awarded

In its latest announcement, the company announced the award of a good service contract to the largest oilfield service provider Baker Hughes. The agreement covers all the services required in the drilling project. From project management to supply of specialized tools and services like wellhead supply and installation. Baker Hughes will be participating in drilling two wells.

 

 

 

 

Opportunities in East Africa’s Downstream Petroleum Sector Are Yet Fully to Be Explored

/in /by

With rising demand for fuel in Tanzania and East Africa, the downstream petroleum marketing sector creates massive value for the economy, but the opportunities are yet to be fully explored.

Sustainable Investment and Business Opportunities in the Sector.

Tanzania and East Africa’s fuel marketing industry is still not saturated. There are enormous opportunities for further investment to increase the adoption of liquefied petroleum gas(LPG) and other wide-range petroleum products across the region.

Furthermore, The sector offers sustainable business opportunities ranging from starting petrol stations marketing liquefied petroleum gas(LPG) and lubricant oils.

The good news is that the entry barrier for entrepreneurs to partake in the sector is relatively lower than in the Upstream(exploration and production) sub-sector of the oil and gas industry.

Huge Employment Opportunities
The downstream petroleum marketing industry in Tanzania and East Africa is huge. The sector offers substantial employment opportunities. Furthermore, the sector is a recession-proof industry. Even in a bad economy, people need fuel. This means the sector offers huge longevity of jobs, in contrast to the Upstream sector.

 

 

Key Factors on How to Select Quality, Reliable, and Durable Pumps for Your Petrol Stations in Tanzania

/in /by

Whether you are new to the fuel station industry or add to your portfolio of petrol stations, choosing quality, reliable, and durable pumps is key to elevating your petrol station business performance and reducing operational costs.

A percentage of a group of petrol station owners and operators prefer to buy second-hand pumps or purchase them based on a low price. They think paying competitive rates to buy high-quality and durable pumps is expensive.

Can I tell you the plain truth if you are one of them?

You are going to shoot yourself in the foot on stuff requiring money. If you continue that mindset, you will buy inferior but cheap petrol station pumps. In a year or two, your pumps will have poor operational performance and cost you a lot of money as you will be supposed to make a huge replacement. I highly recommend buying high-quality petrol station pumps from a reliable supplier.

The first factor you need to consider when purchasing a petrol station pump is to identify your actual needs. Your supplier should focus on helping select petrol station pumps that are tailored to your unique needs rather than focusing on closing sales.

Before purchasing pumps, it is essential to determine your specific needs are? For example, if your petrol station has a large distance (more than 25 meters) between pumps and storage tanks, it is advisable to purchase submersible pumps rather than sanction pumps.

Also, if the type of traffic passing at your petrol station large vehicles and long haul trucks means you need a petrol station pump with high flow rates.

Suitable petrol station pumps for your site are flow rates of 250liter per minute or 500liter per minute.

Furthermore, suppose the vehicle passing at your petrol station location are mostly small vehicles and tricycles. In that case, the petrol station pumps with a flow rate of 40liter/min or 70 liters per minute are recommended.

The last factor is deciding whether you will buy from local suppliers or rely on International pumps suppliers.

When thinking about purchasing petrol station pumps, you have options to buy from local suppliers or import pumps from abroad. Procuring pumps from local suppliers gives you numerous benefits.

First, you will benefit from quick delivery, competitive rates, and fast maintenance services. Furthermore, the more you rely on local petrol station pumps suppliers, the less exposed your operation is to custom delays, import taxes, and exchange rate fluctuation.

Is Global Energy Transition An Opportunity or Curse for Tanzania and Oil and Gas Sector?

/in /by

There is a clamor by developed countries to reduce carbon emissions and curb global warming by ending fossil fuels.

This rush to move away from fossil fuels has caused certain international commercial banks to refuse to fund the development of the oil and gas projects and shift the budget to renewable energy projects like solar and wind.

But the demand for fuel is increasing in Tanzania and East Africa. Without new investment and sufficient funding for hydrocarbon development, we will not build new oil and gas pipelines, gas plants, and oil storage facilities that could add up to the fuel supply in Tanzania.

The critical question is whether the current energy transition will kill Tanzania’s oil and gas industry?

No Economy Can Function On Wind and Solar Alone.

Renewable energy has incredible potential and should be exploited to its fullest. But wind and solar alone cannot meet the growing energy demand in Tanzania and East Africa.

 

The global energy transition is an opportunity for Tanzania’s oil and gas industry to contribute to the energy mix rather than cutting the development and utilization of fossil fuels and other forms of energy.

Many developed countries run out of oil and gas(hydrocarbon) reserves. So there should be a balance between fossil fuels and renewable energy investment to avoid an energy supply chain gap in the country, as witnessed in Europe.

Wentworth to Buy Scirocco’s Stake In Tanzania PSA

/in /by

Wentworth Resources has struck a deal to acquire Scirocco Energy’s 25% interest in the Ruvuma production-sharing agreement (PSA) in Tanzania for up to $16mn. Production is expected to start in late 2024.

Why Liquefied Petroleum Gas(LPG) Is the Business For Which Time May Now Be Ripe in Tanzania

/in /by

Twenty years ago, large populations of Tanzanians were using firewood and charcoal. We used it to cook and do everything.

By the time we got used to firewood, the government had announced that gas was now _the_ clean source of cooking energy.

It was a bit tough for many Tanzanians to embrace this new source of cooking energy.
The attitude of many Tanzanians was that LPG was highly explosive and could endanger their home.

Also, it was seen as a luxury reserved for the rich.
The beneficiaries’ awareness of the social benefits of using LPG was low. So, the annual consumption of LP gas in Tanzania was only 5,500MT in 2005.

Entering into the LPG business in Tanzania at those times was unprofitable because the market demand for cooking with LP gas was too small and Tanzanians were unwilling to pay for it.
After years of consciousness-raising concerning the social benefits of using LPG, and as charcoal and firewood become expensive and controversial to reduce deforestation, there has been a steady increase in the number of households using LPG.

. Today, most people in Tanzania are aware of the LPG as a clean and healthy source of domestic cooking energy, and they are moving away from charcoal and firewood.

The annual LP gas consumption in Tanzania has grown from 5,500 metric tonnes in 2005 to 145,800 metric tonnes in 2019.
With this steady upward movement of LPG consumption in Tanzania, investing in the LPG business can be one of the best business ideas to pursue in Tanzania. Why? Because the LPG has become a constant domestic requirement for households (families), lodges, restaurants, schools, colleges, hotels, and industries.