3 top tips for opening your own petrol station in South Africa

To successfully run a petrol station in South Africa you not only need a boatload of capital but also a strong work-ethic, people skills, and technological know-how.

The fuel retailing sector is heavily competitive in the domestic market and equally as regulated. While anyone is allowed to participate in the industry, it’s not one in which fortunes are made overnight.

At the sidelines of the Fuel Retailer’s Association’s annual conference, Sbonelo Mbatha, co-founder of PetroConnect provided the three top tips for individuals set on owning and operating their own filling stop one day.

“Number one, it is not a money-printing machine that needs no involvement from yourself, it really does need you. It’s a 24-hour business, the day you open you will never close,” said Mbatha.

“The second thing that you also need to know is that staff are the heartbeat of your operations, you look after them, they will look after you. And, the third thing is controls, controls, controls. You need to have systems in place that are able to track that R100 from a motorist into your bank account to ensure that when it gets to your bank account it is not R90 it’s still R100.”

PetroConnect offers a variety of professional services to the fuel retail industry, including the buying and selling of service stations, accredited training programmes, and compliance checks.

What a petrol station costs

Knowing what it needs to run a petrol station, you’ll now need to scrape together the funds to start one.

According to commercial property agents Cyrus Brokers, the average cost of setting up your own service stop in South Africa ranges between R14 million and R20 million.

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 goes for an average of R6,040 per m², of course being higher in certain regions and lower in others, giving us a mean property price of around R24 million.

As such, to set up an independent fuel retailer within South Africa you’re looking at a ballpark figure of R38 million to R44 million.

However, this cost can fluctuate based 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 pricier than those in rural areas. Also, petrol stations that offer premium fuel brands cost more to set up, said Cyrus Brokers.

Apart from the necessary finances, you’ll also be navigating a maze of red tape to achieve your dream.

To start an independent station, one must comply with the many laws stipulated in the Petroleum Products Act, including obtaining environmental authorization.

The barriers will be fewer if you decide to go the franchise route and open a branded station from the likes of Astron Energy, BP, Engen, Sasol, Shell, or TotalEnergies.

Meanwhile, staying independent will require that you and you alone take care of completing the correct paperwork, setting up the physical infrastructure, and running the business.

You’ll also have to keep in mind that you may need specialised fuel dispensing equipment if you’re planning to establish a new station in a remote region of the country.

Additionally, regardless of whether you forge your own path or latch onto an oil conglomerate, you’ll be responsible for ensuring that the fuel you sell meets quality standards, and that the facility complies with environmental health and safety regulations.