Engen Namibia says it’s looking to optimize its customer offering at its existing service stations to increase value rather than expand the number of sites it operates in the country.
“It’s not necessary to increase more service stations because the size of the port is so big unless we want to be closer to the customer if there is commercial sense to be there. But if it’s just putting up a site, then that will impact on the business, so we don’t want to do that. We want to optimise what we have and we have quite a good footprint in Namibia. We want now to optimize those sites to give better experience to the customers,” Engen Namibia Managing Director, Christian Li told the Windhoek Observer.
He said the company which operates 58 service stations around the country, was aware of the increased competition in the country’s fuel retail sector, with state-owned Namcor having recently ventured into the sector with its own retail fuel offering.
“Engen welcomes competition and it’s good for us because it challenges us and it enables us to do better. I think for the customers, it’s very good to have competition, so its welcome,” Li said.
Li said Engen did not have any objections to the continued lobbying by Engen to have its fuel mandate back, but will only become concerned if an overlap emerges in Namcor’s role, considering it now also operates in the country’s retail sector.
“The Legislation is good and its well monitored and controlled, so there should not be an issue. The only issue is when there is an overlap, then there can be an issue, but if it is well regulated and everything is done properly, and it’s a level playing field and everything is done properly, then it's ok,” he said.
“I believe if it’s done and if the customer benefits through better price and better product, it’s good for the economy, but it should be done in the right way. It’s not that I support, but in the end, what counts is the customer getting value for what they pay for.”
Engen Namibia Managing Director, however, bemoaned the existing profit margins for fuel dealers, which he said remained low relative to the cost of operations.
“Our operating costs are quite big, relative to other countries. Even for contractors we need to get services from outside, so it costs more to operate considering the vastness of the regions. What we also trying to do is having contractors in every region to reduce costs and trying to upskill the people. So, what I am saying is that the operating cost is quite high and that is why we need a bigger margin,” Li said.
The concern by Li over dealer margins comes as the Ministry of Mines in July announced that its finds after an investigation carried out, had shown that fuel dealers where struggling to run their businesses profitably and thus agreed to an N$0,06 increase in their margin to 106 cents per litre.