Ghana’s emerging oil industry is creating, as anticipated, new economic opportunities.
More vehicles are expected to be imported into the country, which reasonably means increased demand for petroleum products.
This, perhaps, informs the growing investment in fuel retail stations. The upstream oil industry is barely ten months old, but there is a proliferation of petroleum retail outlets and fuel service stations across the country.
Downstream market activities of supplying products, including bitumen and lubricants, have over the years been handled by the oil marketing companies.
The deregulation policy of the petroleum sector has however attracted indigenous entrepreneurs and other individual entrants.
With increasing interest in storage, distribution and sales, there appears to be good prospects for investors; fuel distribution has become an attraction for many people.
For instance, not less than 15 fuel stations are sited on the 27 km Kumasi-Offinso Road in the Ashanti region. New stations are also being established in the city centers.
This is exciting development, that’s according to Nana Yaw Owusu, who chairs the Ghana National Chamber of Commerce and Industry in the Ashanti Region.
“It’s going to increase our economy so much, giving employment to a whole lot of people and even the areas where these stations are being located it opens up businesses and so on. So there are a whole lot of benefits that we’re going to derive”, he observed.
Some industry players, however, caution the rush into this area of investment.
“The springing up of these petroleum stations has been too phenomenal and doesn’t augur well for the industry, says Daniel Owusu-Appiah, who has 25 years experience in petroleum retail, and he has researched into franchising in the business in Ghana.
According to him, there is a high correlation between economic growth and growth for petroleum and gas. But he observes that failure of local investors to engage competent hands to undertake effective cost-benefit analysis could be costly.
“At every point just about 1km you find a filling station springing up and you know this industry basically is based on location; where you don’t have a very good location and you’re not able to make sales up to about a minimum of ¢100,000.00, you’ll lose because the margins are very little”, Mr. Owusu-Appiah stated, taking into cognizance the cost of utilities, staff salaries and other incidentals.
The National Petroleum Authority (NPA) encourages the establishment of fuel outlets to ease distribution of products. The authority guides prospective investors to set up and operate fuel outlets.
Northern Zonal Manager, Samuel Asare Bediako, says more people are applying to set up such stations.
He says over 60 applications have been received from people who want to “set up filling stations or service stations or LPG filling plants. So yes we expect more of such investments to come in.”
Despite his fears, Mr. Appiah shares the view of Nana Yaw Owusu that the Ghanaian economy will eventually benefit from the fuel retail business.
He acknowledged that “where there is competition, it’s good for the consumer. So right now we have what we call price differentials – some of the oil marketing companies have gone to the extent of reducing the prices which is good for the consumer.”
Mr. Appiah believes the rise in fuel consumption pattern is an “added advantage for people to engage themselves in this business [of petroleum retailing]”.
Demand for petroleum products in Ghana is expected to continue to grow due mainly to the surge in fuel for transportation, households, manufacturing, primary processing and the service industries.
As the vehicular population in Ghana grows, nothing would perhaps stop the investing public from venturing into petroleum retailing.
Story by Kofi Adu Domfeh
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