The growing number of new retail petrol stations presents a new challenge to Engen Limited, the company said in its latest annual report. Until recently, Engen had enjoyed unmatched share of the market, as evidenced by its service stations which are evenly spread across the country, but of recent there has been a rise in construction of fuel stations across towns and along major highways. Engen Limited, a multinational fuel company whose majority shareholder is Malaysian oil and gas company, Petronas, run a number of filling stations across the country which also have inside convenient stores. Writing in the company’s latest annual report, Engen board chair Shabani Ndzinge said the emergence of these petrol stations presents a challenge to them and the industry as a whole. Ndzinge is however hopeful that the recently formed regulation body, Botswana Energy Regulation Authority (BERA) will stabilise the local petroleum product market and ensure that technical and economic standards are followed. According to Ndzinge, the increase in competition will allow them to showcase industry-leading distribution logistics capability, retail excellence and innovation. During the past year, Engen said closure of mines heavily impacted on its margins which included African Copper in Dukwi, Tati Nickel Mine in Francistown and BCL mine in Selibe-Phikwe.
Chimweta Monga, Engen Managing Director, said the closure of mines impacted Engen Botswana through reduction in commercial fuels and lubricants demand in these areas, either directly or indirectly. Monga said retail sales were affected in these areas due to a decline in purchasing power by local residents due to loss of jobs after those mines closed. “Mine closures and associated mining industry cut-backs have in-turn impacted Government revenues and associated spending in social infrastructure projects, including dams, roads, schools, hospitals, water pipelines, etc,” said Monga. But it is not all bad news for the industry as Monga noted that the influx of grey imports motor vehicles from around the world; mainly from Asia and UK has increased demand for fuel which has impacted positively on retail sales. In the immediate past financial year, Engen retail sales were up by 11 percent from the previous corresponding period. Just like Ndzinge, Monga welcomed the setting up of BERA, saying it will enforce industry best practices in order to protect all industry stakeholders. According to Monga, the industry continues to experience increasing and diverse competition from international brands and several indigenous petroleum companies. “It is hoped that the newly formed Botswana Energy Regulatory Authority (BERA) will play a key role in economically and technically regulating the entire industry, ensuring that they operate under the same standards,” he said in the report. Lack of enforcement of industry standards and avoidance of best practices, the Engen MD said puts workers, customers and the environment at risk.