MASSIVE INVESTMENT IN SERVICE STATIONS A TIME BOMB FOR THE RETAIL FUEL INDUSTRY
We have observed with concern the mushrooming of fuel services stations in Lusaka. This is a time bomb in waiting because this will result in the industry being unprofitable. Has the ERB done a profitability analysis for the industry before granting licenses. The proximity of service stations to each other is also a source of concern.
It should be noted that this rapid upswing in new service stations being erected is not driven by increased industry profitability.
Given low economic activity, the volumes of fuel consumed are likely to be static on a year by year comparison in the retail market space or subdued.
What this means is that the cake size is the same or getting less, and as we erect new service stations, the slice of the profitability cake is getting smaller. In the end, the volumes being pumped out if each service station will go below the break even point, and consequently, the whole industry will become unprofitable. Once we reach this point, assuming it has not already happened, the cookie will crumble. We shall then see a massive shutdown of service stations. Note that mines import their own fuels, so to argue that it’s because of new mines opening is invalid reasoning.
So, given this high risk, what could be driving this massive investment in service stations? Is there an incentive that the eye cannot see?
We urge ERB to provide us with an explanation on the industry profitability analysis and whether this proliferation of service stations is economically viable. Or what is the hidden incentive to attract this level of investment. Something looks wrong here.
We suspect money laundering, cleansing of dirty money. It would also be interesting to know the owners of these stations aside from the traditional names. What’s actually most intriguing is that the product is homogeneous with regulated pricing, so the product itself cannot be differentiated to give competitive advantage.
Fred M’membe
Why are you worried, you might as well worry about the mushrooming of political parties on the scene which is eating in your piece of cake
Touche…..kikiki….I am however inclined to side with Mmembe’s observation of the proximinity of some of the said station in residential areas. While ERB has a role to play, the planning authority is to blame.
Imagine what would happen is a fire started at these filling stations that are in very close proximinity of residential areas or schools.
Its just being reckless for planners to approve such. But again under Lungu when the trend started, Dalisto was a beneficary…(wondering if ge declared his interest in the wellbeing of Zambians….kikikiki)
Least of my worries. Talk about good paying jobs, electricity 24/7, water 24/7, clean and orderly streets and townships. Mending potholes, organised railway/ tram transport not noahs in towns. Sewage systems instead of soak aways in townships
There are professionals who regulate this industry who are definitely better informed than Fred M’membe will ever be. If M’membe wants to comment on this industry, the least he can do is to write them formally to ask questions or express his concern. I’m quite sure that they’re willing and ready to explain what’s going. Regulation is always done to protect consumers and any regulatory body which is professionally led will always have time for the public.
Shouldn’t you be worried about your arrest rather? And perhaps the massive exodus of political guants from your party sir?