Afric Oil eyes rural markets

FIRM TO ROLL OUT OUTLETS

FUEL distribution entity Afric Oil is planning to make a comeback into the retail business by rolling out filling stations in rural areas.

Chief executive Tseke Nkadimeng said the firm, which turns 20 years this year, believed rural areas were a more appetising business opportunity compared to the fuel retail market in urban areas.

He said they perceived urban areas as oversaturated.

Tseke said after the brand “Africoil” (owned by Pembani Group and Public Investment Corporation) disappeared from the fuel retail scene in the late 1990s, it planned to resurface by buying and revamping existing service stations in far-flung areas.

In rural communities where there were no fuel retail outlets, the firm would erect new service stations from scratch.

Africoil generates cash by distributing 400 million litres of fuel per year – 95% diesel and 5% petrol – from major oil companies in bulk to the Southern African Development Community and parastatals like Transnet and Eskom, among others.

The company has 75 employees and outsources its delivery.

Nkadimeng said Afric Oil had redone its brand and also redesigned the retail stations, which would be low maintenance and they would “focus mainly on rural areas as in the metros there is a big cluster of fuel stations”.

“The process to launch the filling stations has already started.

“We want to own the filling stations in rural areas and we are looking at the solution for that. We are going to have a discussion with the departments of energy and rural development [and land reform] about the strategy.”

Nkadimeng said the company would conduct due diligence before buying or building a service station.

Defending the decision to roll out in rural areas, he argued that the living standards have improved [in rural areas].

“We are quite confident that the business sense will hold. Things have changed since the 1990s in terms of economy as people used to go home in buses, but now they use cars.

“We are definitely sure the market will stand in the rural areas,” he emphasised.

He said the slump in oil prices has disadvantaged the company’s revenue business as the company was forced to sell stock (that was acquired at a high price) cheaper.