How much it costs to set up your own petrol station in South Africa – and what you can make with it

The average cost of setting up your own petrol station in South Africa ranges between R14 million and R20 million, according to commercial property agents Cyrus Brokers.

However, this excludes a crucial part of the puzzle, and that is the price of the property.

The ideal size for commercial land fit for this purpose would be approximately 4,000m², as per wholesale petroleum supplier Gaspet.

The latest data from Statista shows that commercial property swaps hands at an average of R6,040 per m², of course going higher or lower in certain regions, giving us a mean property price of around R24 million.

Therefore, to establish an independent fuel retailer within South Africa you’re looking at a ballpark figure of R38 million to R44 million.

Red tape aplenty

Setting up a petrol station in South Africa requires substantial infrastructure and fuel dispensing equipment. Depending on the business model, it can be part of a chain or an independent station.

However, this cost can vary significantly depending on the location, size, and quality of the station, as well as the brand and range of fuel it provides.

Petrol stations located in major metros such as Johannesburg are usually on the more expensive end of the price spectrum, while those in rural areas can be established for cheaper. Also, petrol stations that offer premium fuel brands cost more to set up, said Cyrus Brokers.

To start an independent station, one not only needs to have the necessary capital but must also comply with the laws stipulated in the Petroleum Products Act, including obtaining environmental authorization.

Independent petrol stations tend to have a higher average cost than those run by oil companies, due to the expenses of getting the correct paperwork, setting up the physical infrastructure, and running the business.

Additionally, petrol stations located in more remote areas may need more specialized fuel dispensing equipment, making them more expensive to operate.

Another point to take note of, in densely populated areas, competition between petrol stations can lead to lower prices for consumers and thinner margins. In less populated areas, petrol stations often have a monopoly over the fuel market, meaning they can charge more for their services.

However, owning a petrol station in South Africa comes with its own set of challenges and responsibilities, said Cyrus Brokers.

Petrol station owners are responsible for ensuring that the fuel they sell meets quality standards, and must also comply with environmental health and safety regulations.

In addition, they must compete with other filling stations for customers and must constantly monitor fuel prices to remain competitive.

Major brands like Astron Energy, BP, Engen, Sasol, Shell, and TotalEnergies are open to franchise applications but require a significant personal contribution, anti-bribery and corruption compliance, and management skills.

Return on investment

Cyrus Brokers currently has several petrol stations listed for sale across the country, ranging from as low as R2.3 million in price to as high as R38.5 million.

The advertisements provide several interesting details on the behind-the-scenes workings of these service stops, including their main income streams and monthly profits.

This gives us an indication of the level of income one can expect when setting up their own filling station, depending on the location.

We can also see more or less how long it will take to recoup such an investment assuming an average capital expenditure of between R38 million and R44 million: