Tuesday, 13 June 2017 09:31

Engen upbeat on new energy regulator


Engen Botswana, the country’s only-listed oil company, is delighted that government has established an energy regulatory authority, BERA, to level the playing field. The Act to establish the Botswana Energy Regulatory Authority (BERA) was passed by parliament last year. The Authority could not begin operations in the same year due to non-availability of funds. 


BERA is among others tasked with ensuring fair competition within the industry. “Engen Botswana welcomes the recently established Botswana Energy Regulatory Authority (BERA), hoping that this body will stabilise the local  petroleum product market, and ensure that technical and economic standards are followed,”  Chairman, Dr Shabani Ndzinge  wrote in the group’s latest annual report. 


He said his company is looking forward to seeing how this BERA unfolds in  2017, ‘especially as the proliferation of  retail petrol stations continues to grow’ Meanwhile, Freddie Motlhatlhedi an energy advisor, in the department of energy has told government’s Daily News that, BERA is expected to start operations this month (June). 


Over the years, players in the energy sector, especially in the industry have complained that government’ setting of prices for their petroleum products in most cases works against them, resulting in limited profit margins. According to Ndzinge, the growth in the energy sector provides challenges, which comes with new and varied competition. Engen, which has a market capitalisation of P1, 5 billion will not sit down and let players overtake it. 


“It (competition) also allows Engen Botswana Limited to showcase its industry-leading distribution logistics capability, retail excellence and innovation – factors that we believe will continue to differentiate us from the competition,” wrote Ndzinge who is also Vice Chancellor (finance) for Botswana International University of Science and Technology (BUIST). 


Engen’s Managing Director, Chimweta Monga wrote in the 2016 annual report that more and more retail filling stations for well-known brands and independent entities are mushrooming, thereby keeping them on their toes.  The closure of some mines, such as BCL and Tati Nickel mines has affected commercial sales at the company. “Retail sales were also affected in these areas due to a decline in purchasing power by local residents as a result of the difficulties encountered by the mines,” said Monga.  


In the past year, Engen piloted the 1Card system to a number of selected customers. The system, which will be launched countrywide this year, will enable individuals and companies to load credit on to a ‘swipe card’, and use it to pay for fuel and related services at any service station in the Engen retail network.


The company remains strong despite the fragile economic recovery which has dampened consumers’ confidence. For the year under review, Engen recorded a profit after taxation of P132million up , by 21 percent year on year. ‘

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Engen has recorded 11 percent increase in fuel sales from July last year driven largely by its annual Farmers Dream Promotion In its 2016 annual report, Engen Managing Director, Chimwenda Monga said the overall retail performance increased by 11 percent in 2016 with 63 percent of the increase occurring during promotion months, July to December.


  “The annual Farmers’ Dream promotion which commenced in July 2016 has boosted sales overall, recovering a brief planned versus actual deficit,” said Monga. Monga explained that high impact promoions, continued focus on customer service excellence and unparalleled convenience enabled Engen to keep pace with the performance of competitors.


“This was especially significant in the increasingly saturated retail fuel market space,” he said. He added that the increased influx of second hand and imported motor vehicles from around the world increased demand for fuel in Botswana and this had a positive impact on retail sales.  


Monga said they are constantly reviewing their retail network to ensure they have the right dealers in the right service stations to enable the company to maintain the highest return on investment.  Last year, engen piloted the 1card system which enables individuals and companies to load credit on to a swipe card and use it to pay for fuel and other goods at Engen service stations.  During the 2016 reporting period, Engen recorded 27 percent increase in profits supported by a six percent reduction in overall operating expenses.


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