BUSINESS OPPORTUNITY

In the last two years independent South African companies have been procuring fuel from overseas countries and bringing

it in through the Matola Corridor. The man reason for the imports was to supply the regions in the Northern part of the country. The Zone of differential made it possible to supply those areas at a better discounted rate than from Durban. The inland fuel suppliers could also not supply the demand consistently and this created a hugedemand from Matola.

Strategic Options

Option 1

Option 1: Benzol Fuel can procure fuel (all grades of diesel) from overseas countries. Storage must be negotiated in Matola.
The product will be sold in two ways.
1) Wholesale customers will load COC Cash upfront in Matola.
2) Delivered product to various customers. B y using option 1 the Margins will be higher.
Estimated Margins: Products procured overseas and ‘all Matola costs included’ will be between 60 and 80 Cpl.
Products sold then to customers estimated between 10 and 40 Cpl.
Current volume requirement between 10 and 20 Million litres P/M.

Option 2

Benzol fuel can negotiate with a current supplier through Mozambique. By using this option, Benzol must secure a certain volume on a long term basis. The discount will be crucial for negotiating with customers.
The margins will be less than option 1.
Estimated Margins received from oil companies? Current assumption
on true volumes is 60 Cpl.