Project Summary
- The aim of this project is to create a 50 million liters diesel storage facility in Cape Town, South Africa, capable of holding 36 million liters, to be replenished three times per year.
- Liquid fuel is regarded as a strategic necessity to the country. South Africa’s fuel consumption is estimated at a whopping 11,1-billion litres of petrol and 12,1-billion litres of diesel a year. So, to keep the wheels of the economy moving smoothly, the country relies on its six refineries, four of which are based along the coast; namely the Cape Town Refinery (Astron Energy Refinery -Caltex), Engen Refinery (Enref), Sapref Refinery and PetroSA’s GTL Refinery in Mossel Bay as well as two inland refineries - Natref and Sasol Secunda Refineries.
- The current supply is at 65% in response to the demand and there is a growing demand for fuel in the inland area, Transnet Pipeline completed the construction of a new multi-product pipeline (NMPP) in 2012. Crude oil and refined product (diesel and petrol) are transported from the coast via a dedicated crude oil pipeline and a NMPP to inland refineries and the products are marked for use by all oil companies.
- The existing players are endeavoring to broaden their network or infrastructure in order to keep up with the increasing need for liquid fuel.
- To initiate this enterprise, the project necessitates a minimum of R902 million or 45.1 million USD, along with substantial retained earnings in the initial year, which are projected to grow annually. Furthermore, our long-term strategy involves establishing our own fuel stations nationwide, in addition to engaging in distribution or wholesale operations.
Success Factors
Gasela Oil & Gas has arranged to import cost-effective and refined diesel from a reliable supplier. The supplier will deliver 50ppm diesel every four months, with a delivery of 36 million liters (equivalent to 30,000 metric tons). The estimated price for this diesel shipment falls within the range of R8 to R12.5 per liter, including VAT (which converts to $550 to $750 per metric ton, including VAT). It's worth noting that diesel, is not regulated in RSA, and but the wholesalers price diesel at R22 per liter excluding VAT as per November 2023. The company has entered into offtake agreements with its present customers.
Additionally, Gasela will leverage its existing fleet of trucks for distribution purposes. This strategic decision enables them to maximize the use of their current resources and infrastructure, leading to optimized operations and reduced distribution costs. Moreover, concentrating on diesel supply can aid in mitigating the risks linked to blending various fuel types. Managing and storing multiple fuel types can be intricate and heightens the likelihood of cross-contamination. By exclusively focusing on diesel, Gasela can reduce these risks, ensuring the superior quality and consistency of its product.
Additionally, Gasela will leverage its existing fleet of trucks for distribution purposes. This strategic decision enables them to maximize the use of their current resources and infrastructure, leading to optimized operations and reduced distribution costs. Moreover, concentrating on diesel supply can aid in mitigating the risks linked to blending various fuel types. Managing and storing multiple fuel types can be intricate and heightens the likelihood of cross-contamination. By exclusively focusing on diesel, Gasela can reduce these risks, ensuring the superior quality and consistency of its product.
Business Model
Nature of Business |
Distribution and wholesaling of Diesel in Cape Town and other parts of the country. |
Sales & Marketing |
Gasela Oil and Gas is in the process of developing a website that will provide comprehensive information to its stakeholders, including details about the company, distribution network procedures, and terms and conditions. Additionally, the company plans to increase its marketing efforts by employing various platforms and strategies to meet the growing demand. The allocated budget for Sales and Marketing is estimated to be R3.6 million per annum. |
Target Market |
Parastatals, Private and Foreign Market of Southern African countries. |
Location of Service |
The company's future proposal involves setting up a 60 million liters plant inland, potentially in locations like Durban or Cape Town, which is in close proximity to the harbor. |
Milestone |
To import diesel and start distribution it will require almost like 3-4months after funding. |
Gasela Oil and Gas Current Status
Gasela Oil and Gas presently operates in the distribution business, providing transport services. The business is thriving, and they are currently operating a fleet of 8 trucks for distribution in Cape Town and its surrounding areas. Recognizing both the opportunity and demand in the storage and distribution of diesel, the company, with its 4 years of experience, aims to expand its operations. Given its modest cash requirements to initiate this new venture, the company is open to various funding methods, be it through Debt or Equity. By effectively managing its funds and optimizing profits, the company intends to repay investors or loans while also fueling its expansion plans. If the company decides to secure a loan, the repayment process will commence from the third month of trading. Alternatively, if the funding comes through equity, the company is willing to offer its investors shareholding options, thereby making them silent partners in the venture.