Oil Sector to Meet

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By Petronella Sibeene WINDHOEK Around 120 key stakeholders in the oil industry meet at Walvis Bay next week to discuss current issues related to the fuel industry in Namibia. Executive Officer of the Association of Service Station Owners (ASSO), Johan Pieterse, said yesterday the annual conference would bring together officials from Government, the private sector and retailers to deliberate on current trends in the industry. Fuel price instabilities in the market will be one of the issues on the agenda. Minister of Mines and Energy, Erkki Nghimtina, will deliver the keynote address. The conference will take place from 25 to 27 April. He says the power of the fuel industry cannot be under-estimated given its characteristics and influence on the economy, hence the theme of the conference “Fuel is the Future”. He commended the Government for putting up a legal framework (Petroleum Act) that allows flexibility in the sector. Pieterse emphasised the need to maintain the sound relationship between Government and ASSO. The retail fuel industry is significant and the potential for growth should not be taken for granted, he said. He added that tourism, the second biggest industry in Namibia, is interlinked with the fuel industry. Although the sector plays a meaningful role in job creation, economic growth, local economic development and economic empowerment, certain constraints and restrictions are hampering the natural growth and development of the industry. “Without the diversity of fuels supplied by this industry, all other industries would come to a standstill.” He could, however, not elaborate on the constraints faced by the industry. The retail fuel industry has an undisputed role in the economic development of the country, illustrated by the number of retail fuel sites as well as the people employed,” he said. Further, its development is a key factor in the Government’s over-arching policy aims of Broad Based Black Economic Empowerment. There are about 5ÃÆ’Æ‘ÀÃ…ÃÆ”šÃ‚ 000 people employed in the industry countrywide. Pieterse described the industry as being characterized by unprecedented high levels of competition, relatively low gross margins and high stock turnover rates. Oil companies, who act as franchisors, view the industry as highly capital-intensive, while retailers see it as highly labour-intensive. During the conference, issues pertaining to understanding the dynamics of profit-making in the industry, would be highlighted. Despite the difficulties experienced by small retail fuel outlets, the industry remains an attractive option for new entrants. There are about 200 fuel outlets in Namibia. With the unfavourable exchange rates, high crude oil prices and pressure from stakeholders, Pieterse says the relationship between oil companies and retailers remain crucial. “If oil companies have to prosper, retailers need to prosper as well. It would be short-sighted for oil companies not to take cognisance of the needs of fuel retailers, to embrace them and to implement strategies and philosophies aimed at their wellbeing,” he said. While most countries in the world have introduced self-service as opposed to pump attendants, Namibia cannot afford this given the economic climate characterized by high unemployment. Instead, fuel retailers have followed an alternative business by introducing convenience stores, workshops, dry cleaning services, lotto tickets, postnet, bank terminals, restaurants, bakeries, fruit and vegetable sales and car rentals. Future challenges in the industry remain how to maintain a favourable market environment, which will sustain employment and give room for entrepreneurial development and secure investment in Namibia. ASSO’s membership represents a cross section of dealers from all the oil companies operating in Namibia including Engen, BP, Shell. Total and Caltex. ASSO is a non-profit making organisation with a vision to promote and protect the best interests of fuel retailers through the creation of a healthy environment that secures value-added initiatives.