Petrol industry still has gas in the tank
JOHANNESBURG – The competitive South African fuel industry is sustainable, despite the tough economy, says fuel empowerment company PetroConnect’ co-founder Sbonelo Mbatha, speaking at the sidelines of the KZN regional Fuel Franchise Conference in Durban.
Nedbank Business Banking has partnered with PetroConnect to help advance and enable transformation in the sector.
“Crude prices have remained stable between the 60 and 70 mark, but the fuel industry has proven to be quite a resilient sector over the past turbulences that we have had,” says Mbatha, referring to the rand weakening.
The industry is not just about selling fuel as it was previously, adds Mbatha as fuel retailers have become “mini-malls”.
Mbatha says: “In the next two to five years there will be a lot of changes in the offerings. The industry is here to stay. It will grow and the number of sites will also grow.
“There is going to be more of a convenience aspect into this growth as the Fourth Industrial Revolution (4IR) is upon us. There will be more retailers evolving their thinking and adding new offerings to the convenience aspect.”
He adds that the fuel offering is also changing as products like lead replacement petrol will slowly be done away with while the introduction of diesel 10 was gaining momentum in franchisor uptake.
PetroConnect says it is setting up systems operational systems in response to the 4IR.
Another PetroConnect co-founder Mark Harper says the industry is currently very competitive as numerous new service stations have opened despite consumer spending not having increased due to the fuel price.
Harper says while the industry is still proving resilient, retailers need to be thinking ahead as the competition is hard.
Fuel Retailers Association (FRA) chief executive Reggie Sibiya says one of the key challenges fuel retailers are facing is in the drop in volumes attributed to continuous price hikes and increases in the costs of living making consumers spend less.
“The volumes are declining while the costs of doing business are actually increasingThis is becoming a very tough environment to survive,” says Sibiya.
Sibiya says that the 4IR is already affecting everyone and it is going to receive great focus in the industry conference set for next month.
“We will have experts coming to talk to us that include banks on how the revolution is going to impact relationships with their clients.
“We have landscape changes in terms of skills on how are they going to impact our businesses as some jobs will be lost while there is an opportunity to create others.
“There is a whole range in terms of service station operation and the 4IR.We started discussing it two years ago in our conference that looked at innovation and how it was impacting service station change”
He adds that they are bringing experts from Europe and Thailand that have been through that journey to share their experiences so that they can advance the industry in the face of the 4IR.
Transformation the big changer
Sibiya says the biggest factor affecting the industry currently is transformation. The industry is busy with the sector code, which is still in draft phase and about to go out for public commentary.
“We believe that the role of all stakeholders has culminated in something that we all believe in and are committed to do. It is obviously something that the association will need more for to assist all our members as the score-card is quite technical.
“We need to educate our members and give them all the support they need and also encourage them on the issue of transformation to make them see it as something that is beneficial. We also emphasise that transformation is not only about ownership. It is also about other elements like skills development and ensuring people are ready for better opportunities,” Sibiya says.
The Department of Energy set out to align the Petroleum and Liquid Fuels Sector Transformation Charter with the B-BBEE Act, the B-BBEE codes of Good Practice and the B-BBEE policy framework to serve as a Sector of Good Practice in 2012. The sector, however, continues to face various challenges in achieving its transformation imperatives.
Mbatha agrees that transformation is the big buzzword in the industry.
In 2000, the oil companies and all stakeholders signed the Liquid Fuels Charter, which had certain targets to be met, but never happened.
He says the sector has now adopted an industry specific code, which is trying to push the transformation that goes from government, oil companies and dealers affecting everyone.
PetroConnect says it is collaborating with the FRA and legal firm Quattro to understand the legal aspects relating to transformation compliance.
Legal group general council Troy Chiocchetti from law firm Quattro says they are creating a forum, which will dispel the misconception going on within the industry. The forum aims to get some meaningful response back from fuel sector stakeholders such as fellow fuel site owners or from the FRA.
“Most (responses) are at a legislative level, but also at a day-to-day level. It is also about what the site owners are going through themselves on a daily basis. That is what the legislative changes are and what they can anticipate to come up with some solutions to be able to help them manage their processes and their systems,” he says.