How Fuel Retail Economics Actually Work

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• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. How Fuel Retail Economics Actually Work
• 3. The Business and Its Revenue Streams
• 4. Market and Site Analysis
• 5. SWOT and Competitive Position
• 6. Regulatory Pathway and Licensing
• 7. Operations Plan
• 8. Management and Organisation
• 9. Capital Requirement and Funding Structure
• 10. Financial Projections
• 11. Break-Even Analysis
• 12. Debt Service and Working Capital
• 13. Investment Returns
• 14. Sensitivity and Scenario Analysis
• 15. Risk Management
• 16. Implementation Timeline
• 17. Exit Options for Investors
• 18. Key Performance Indicators
• 19. Key Assumptions
• 20. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital and Depreciation Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

Fuel retail in South Africa is unlike almost any other retail category, and the differences drive every number in this plan. Four features matter.

• The petrol price is set by regulation, not by the retailer. The Department of Mineral and Petroleum Resources gazettes the pump price monthly by pricing zone, built up from the Basic Fuel Price — an import-parity calculation — plus fuel levies, the Road Accident Fund levy, distribution costs and the regulated margins. Retailers may not discount petrol: resale price maintenance applies.
• The retail margin is a fixed cents-per-litre allowance, not a percentage. It is set under the Regulatory Accounting System, which models a benchmark service station pumping 233 000 litres of petrol a month, costing roughly R9.5 million to build and R3.6 million a year to operate, and derives the margin required to deliver a fair return on it. The margin is adjusted annually; the December 2025 adjustment was a net increase of 3.6 cents a litre on petrol. The retail margin makes up roughly 15 per cent of the inland petrol price.
• A rising fuel price is bad news for the retailer, not good news. Because the margin is fixed in cents, a higher pump price adds nothing to gross profit but increases the cash required to fill the tanks, raises card merchant fees charged as a percentage of turnover, and increases stock-loss exposure. This plan models that dynamic explicitly.
• Diesel is not regulated at the pump. Diesel wholesale margins are regulated but the retail price is not, so commercial and fleet customers negotiate discounts. On a corridor site with significant light-commercial and taxi traffic the realised diesel margin is materially below the petrol margin; this plan assumes R2.45 a litre against R3.15 for petrol, which is a deliberately conservative posture.

The consequence is the picture in Section 1. Fuel accounts for 83 per cent of what passes through the tills and 63 per cent of what the business actually earns. The convenience store, at 13 per cent of revenue, delivers 24 per cent of gross profit because it trades at a 27 per cent gross margin against fuel’s 11.2 per cent. This is why every serious operator in the market competes on the shop, the food offer and the forecourt services, and treats fuel as the traffic generator that makes those businesses possible.