Paul Muhato has been appointed as the new Engen Petroleum Tanzania Ltd Managing Director.
Muhato’s key plan is to grow the company’s portfolio in East Africa.
“At the top of my list of objectives is the need to enhance business growth via the current retail sites and build a robust network of additional retail outlets that reflect the Engen brand, whilst also aiming for the Engen Tanzania terminal to turn over its 24,000m3 capacity at least once a month,” explains Muhato.
Snapshot of current operations
Currently EPTL commands approximately 2% of both retail and commercial market share, a sharp decline especially in the commercial sector which used to enjoy a more robust 7% to 8% allocation.
According to Muhato, this all changed when the wholesale (read commercial) market prices fell below Engen’s product cost, prompting a concerted effort to constrain the business to positive margin territory as well as reducing related financing costs of carrying huge inventories in a market with highly volatile international prices.
“Our attention has shifted to the retail end of the business which has less or nil credit exposure and more or less regular margins as captured in the Energy and Water Utilities Regulatory Authority (EWURA) monthly price cap formula. The additional turnover from hospitality business at the terminal will cover overheads and reduce our unit cost per litre,” says Muhato.
Retail expansion strategy
EPTL currently has 9 retail sites, of which 7 are operational.
The plan is to increase these to 10 operational stations by the end of 2016 and to grow the retail base by at least 20% year-on-year thereafter.
“We have stepped up our pursuit of end-user commercial accounts and expect that the combined growth in the retail and commercial (end-user) business will take us to at least 5% market share within the next 3-5 years.”
Muhato’s career ascent has seen him rise from Marketing Manager and Acting General Manager of Kobil Tanzania Ltd to MD of Engen Petroleum Tanzania Ltd.
Prior to amassing experience in Tanzania, Muhato enjoyed an 11 year career in Sales and Marketing as well as Supply and Trading in the Kenyan oil industry.
“While at Kobil Tanzania Ltd, running a fully-fledged petroleum company with an initial 40 staff, 22 retail stations, various end-user commercial clients and a 33 000m3 capacity multi-product terminal that catered for local, transit as well as hospitality customers gave me a great opportunity to understand the inner workings of managing a petroleum company,” says Muhato.
“It is against this background that I expect to start this new phase at EPTL, which has a more or less similar profile,” he says.
Tanzania’s untapped potential
According to Drikus Kotze, Engen’s General Manager: International Business, East Africa and Tanzania in particular, is seen to be one of the top new frontiers for business growth and development in Africa and the world as a whole.
“At 6.5%, Tanzania ranks among countries with the highest GDP growth rate; it has a variety of natural resources and is without a doubt, the most stable democracy within the region.”
Separately, EPTL has a lot of untapped potential in the form of various strategic assets mainly in Kigoma, Mwanza, Isaka and the Moshi regions alongside the Dar Terminal.
“These are expected to contribute significantly to the growth of the company as well as the neighbouring land-locked countries where Engen operates and the entire Engen group as whole,” adds Kotze.
And what of the obstacles and challenges posed to investment in the country?
According to Muhato, whereas the Tanzanian government and the relevant agencies have taken significant strides to reduce obstacles to trade and promote investment, bureaucracy and arbitrary changes to various policies, for instance, petroleum tax collection procedures, transit product management and bulk petroleum procurement procedures against the backdrop of an erratic exchange rate between the local currency and the US dollar are still a concern.
“These ultimately have significant financial and logistical implications on Engen Tanzania business and, subsequently, other Engen operations in DRC, Rwanda and Burundi that rely on the Dar-es-Salaam port for petroleum supplies,” continues Muhato.
However he knows only too well that these constraints come with the job description.
“The EPTL team is energized and ready to hit the road running as we look forward to a brighter future.”