Namibian fuel retailers have challenged Mines and Energy Minister Tom Alweendo to implement comprehensive measures that allow the sector to return to profitability.
This was after the ministry last Thursday announced the temporary suspension of the issuance of retail and wholesale fuel licenses to new applicants.
“This comes in handy, although results will not be achieved immediately, it will take time for a full recovery, for one to rise from a half operational turnover and become profitable. This is a volume pegged business, whereby more volumes mean gaining more, however in this regard, the cake has been remaining small yet the volumes have been shrinking year-on-year,” Fuel and Franchise Association of Namibia (FAFA) Chairperson Hennie Kruger said.
He added that the Ministry of Mines and Energy still needs to address the matter of vertical integration as well as banks’ involvement in the transactional process, which service stations owners feel is encroaching on their profit margins.
“If the volumes do not increase, it’s better to adjust dealer margins so that we can profit from the level we are operating at.”
FAFA last month cancelled a nationwide strike after it presented an array of demands to the ministry, among them calls to address the issue of dealer margin, of which the government acceded to and adjusted by 50cents, shifting from 113 cents to 163 cents, from an initial demand of N$1.77
“We appreciate the government efforts, at least one can see they are trying to resolve our grievances, and that is commendable of the Minister. However, we still implore the minister to track the dealer margin annual survey, so that we know what the issues and causes could be affecting the industry,” said Kruger.
“Service stations must make profit, but the only way is to iron out all the root causes. Wholesalers who engage in retailing are direct competition thus negatively affecting our sales,” Kruger said.
