In South Africa the retail price of diesel is not regulated. That is why you sometimes see in some mainstream petrol stations discount diesel. My local Engen has a discount Wednesday when diesel trades at a 60c discount per liter.

But there are places who’s main business is selling discount diesel. One in Cape Town sells diesel at a R1 discount to retail. This causes people to go out of their way to this place because if they are filling up and they are close enough they will save a bit.

The funny thing is that if you look at fuel tank capacity the savings may not justify driving specially to such a place unless you have a truck. But that is exactly what people do. My neighbour who has a Hyundai H100 which does not have a huge tank, I think 65l? That is not that great a saving even if you filling up.

The diesel supplier my neighbour uses. We live close to the N1 (the top bright yellow line). Note BP price vs. Mosh on Diesel 50 ppm. There are other service stations much closer. Apparently people will travel further even for a few cents discount.

 

Is there a small business opportunity?
Can you buy you a fuel storage tank from WeBuyCars and be in business?

According to Sapia “The diesel retail price is not regulated although the DMRE presently publishes a wholesale list price for diesel”. The question is what are you getting it wholesale for? If you not making much then you would have to charge a premium by for example doing deliveries to farms.

There is still a business opportunity, but not for too small quantity. You get various places, random places where there are fuel pumps where you can buy discount diesel. It’s not branded or anything. It’s just an entrepreneur operating it.

What is required
Now according to the government you need a petroleum wholesale licence if you want to sell petroleum products to consumers for end use, you must apply for a wholesale licence from the Department of Mineral Resources and Energy.

The licence allows you to buy petroleum products in bulk (1 500 litres or more, per transaction of petroleum products) from a licensed manufacturer, and to sell it to end users.

The licence is valid for as long as your business operates.

How long does it take
You should receive a response within 90 days from the date when the Department received proof of publication of the notice of application.

How much does it cost
R1 000
R500 annual licence fee.

Now anything involving the national government aka ANC involves a certain amount of muppetry. There are manufacturers that sell to people who don’t have a wholesale licence and there are retailers who don’t have a wholesale licence who sell to consumers  because well this is South Africa and laws are guidelines. Apparently the government is looking into “wholesalers who sell directly to the public, operators without a licence, undisclosed storage facilities, and empowerment fronting“. But I don’t know anything about that of course. A once off R1000 and R500 a year is reasonable enough providing they sort you out in the promised 90 days.

The illegal trade of diesel is the most common from of illicit activity within the fuel retail sector.

What is the best business model?

At its most basic you can buy a diesel pump with meter from Adendorff for under R3000 (that crap basic MAC AFRIC brand) and you can be in business by attaching that to whatever container. I have seen it attached to drums and flowbins. But those are mainly mickey mouse operators. I prefer pumping from actual pumps at a fixed location.

If you have been doing your homework you would have come across what is known as a “bowser”.  A bowser is a tanker used for fuelling aircraft and other vehicles or for supplying water. Now they come in a few configurations and sizes. The most basic will be a drum bowser. There are some cheap manual ones for under R2000 and automatic ones for under R5000 (which you could DIY with the above Adendorff pump). While portable I don’t like drums. Not for portability and not for stationary. Next up will be trailers. Now you get some cheap trailers as well. But the only place I have seen cheap quality trailers has been at WeBuyCars. I am not a big fan of those water tank style bowsers either.

I prefer old fuel dispenser pumps. This is what I am talking about:

These pumps can be mounted on concrete pumped from storage tanks.

 

The Market
The diesel trade in SA is a bit of a wild west, while most people just fill up at multinational petrol stations. There is a parallel market filled with cowboys. Have a look at the Diesel Buyers & Suppliers in S.A Facebook group. You will even be able to pick up a tanker for half a mil. As per usual Facebook warning beware of chancers.