Opening a Petrol Station

Want to open a petrol station

South Africa is one of the leading consumers of petrol and diesel and you can be the one selling it. But buying a petrol station or petrol stations is not an easy task. If you are not familiar with the petroleum retail industry it is better that you open franchises in other sectors of retail.

According to the Department of Mineral Resources & Energy, South Africa pumps about 11.7 billion liters of petrol every month. To buy a petrol station, you will first need to understand how we value petrol stations. According to the Department of Mineral Resources & Energy, Petrol Stations in the country have an annual turnover of about R220 billion.

Independent filling station:

After you have learned how to value a fuel station business, you will have to decide if you want to open a franchise. This is a daunting process for many people as you will need to jump through several legislative circles to get all your approvals in proper order. After that, you will also need to get your hands on environmental authorization and land use rights. After this, you can apply for your operating license.

Petrol Station Franchise:

If you are a first-time investor in this industry, choosing to go with a franchised brand can be a good option, even though it comes with some restrictions. If you do not know how to value a petrol stations’ business, sticking with the veterans of the industry such as Astron, Total, Shell, Engen, Sasol or BP is a great option to get started. The prices are often dictated by the location of the station, the value of the fuel that is pumped, and other sources such as convenience stores or vending machines.

In many cases, it is advised to buy an existing franchise operation provided you know how to value a service station business if you are looking to avoid any location or licensing issues. Most of the major retailers have set an extensive vetting process before they opt for any owner in their circle.

Highlights

South Africa pumps more petrol than any other country on the continent – some 11.7 billion liters per year, according to the Department of Mineral Resources & Energy. Diesel isn’t far behind. Although traffic levels dropped off significantly during 2020’s COVID-19 lockdowns and may take some time to recover, petrol stations are still likely to generate profits for a while to come. The cheapest stations cost around R1 million, but if you want a popular location and all the trimmings, you can pay 20 times this.

The profits from these billions of liters of fuel don’t all end up in the pockets of petrol station owners. Filling stations in South Africa are tightly regulated, and more than 60% of what consumers pay goes to levies, taxes, and margins.