TANZANIA: “APART from the ‘bodaboda’ job that I do, I also sell fuel, which gives me a substantial profit although I do it as a side job.
Every day I make sure that when I have a trip to the town centre or along the highway, I make a point of buying petrol and diesel for my customers.
I know it is a risky job, but when it comes to increasing the family’s income and there is an opportunity available, I have to take it,” says Colman Ponsiani, a Geita resident.
The side job that he is doing is prompted lack of reliable filling stations, especially in many rural areas which is a result lack of conducive infrastructure, including roads and electricity.
Access to fuel services in most villages is not easy because many areas are not attractive to big investors.
It is a fact that investment in a filling station requires a lot of capital and everyone who invests wants to make a profit.
Yet, some villages that have not been reached by fuel services, especially petrol and diesel are at great risk. The business there is done locally because there is no investor in fuel stations.
The locals use gallons or bottles to store fuel inside their houses which are also used as a shelter for the family.
Dealers need to be innovative and expand their network to remote areas where there is a huge demand for fuel.
The expansion of fuel filling stations is required especially in remote areas because fuel is frequently needed and people face challenges of getting reliable fuel.
According to the Energy and Water Utilities Regulatory Authority (EWURA) report, as of 31st March 2022 there were 2,032 petrol stations in the country, with most of them located in urban areas.
For most rural folks, they know that major petroleum dealers should make a point of establishing more petrol stations in rural areas and reduce the number of people like Ponsiani.
It is a common sight to witness people carrying gallons and bottles from one place to another in search for fuel.
With this shortage of reliable petrol stations in rural areas, the government through Rural Energy Agency (REA) came up with a project to issue low interest loans so that local investors can construct small fuel stations with at least one pump in areas that are not easy for investors to reach.
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The first announcement for loan applications to build rural filling stations was made in June 2023.
The REA Senior Engineer, Eng Deusidet Malulu told the ‘Daily News’ that is dangerous for small time fuel traders to store fuel in the same house where they live with their families because of the fumes which are harmful if inhaled for a long period of time.
“Due to the reality of the challenges we encountered in villages and the options they had, it was very wrong because people were selling fuel by the gallon or water bottles while storing it inside the house,” Eng Malulu stressed.
He says due to the concept that REA facilitates can access various energy sources, especially electricity, cooking and fuel products, they came up with the idea that the best way to facilitate access to energy is to empower citizens.
“The agency has sought the solution to eliminate the risk for Tanzanians who do this business and we provide them with a soft loan as capital and not only to save their lives but also helping customers who walk long distances to find the product,” says Eng Malulu.
The engineer says the team from Energy and Water Regulatory Authority (EWURA) and TANOIL came together to figure out a very simple cost to run one fuel pump with an office and toilet which can hardly cost 70 m/-.
Based on their calculations, they set a plus or minus for lending up to 75 m/- to enable the business people to build the facility.
Eng Malulu says REA allocated 12 bn/- which would be disbursed to individuals willing to access loans to establish rural filling stations to ensure rural areas have access to quality fuel at authorised rates, reducing the risks associated with the arbitrary sale of fuel products of uncertain quality.
“We have received funds from development partners, with major the major partner being the World Bank,” says Eng Malulu.
Engineer Malulu says that the loan is a cost-sharing initiative where an applicant can choose to apply for part of the amount and top up the remaining costs for constructing the filling station.
The loan is a revolving fund with a grace period of one year; thereafter the lender starts a refund to enable others to borrow the same which attracts a five per cent interest rate while the payable period is up to seven years.
Eng Malulu says that so far they have not given any loan but there are 10 business people who have come forward to apply and are in the final stages of signing for the loans which they will receive by the end of September this year.
He said the business people who have applied for the loan come from Kagera region (3), Mara (2), Dodoma, Simiyu, Geita, Iringa and Lindi.
“The door is open, we invite qualified citizens to fill out the forms so that they can be evaluated and get the loans.
Collateral
Eng Malulu says the loan guarantee is the filling station itself and at least 25 percent the value of the land, noting that it does not prevent someone from using the guarantee he wants apart from the filling station because at the end of the day it is his/her business.
The main criteria for getting the loan, he said, is to have a business area of at least 400 sq. The loan is more focused on rural areas where it is not easy for investors to invest and the target is to construct the station at least 7 km from the main road and 10 kilometres from another filling station.
The area should have a recognisable ownership by having either a certificate of title, a customary document or a document issued by the village government.
Others are permits from EWURA and a construction permit from the council. In this sense, an applicant must show the ability to do business, be it a business licence or have a letter from the place where he runs his or her business to show that they can do business.
Eng Malulu says REA is collaborating with the bank to support the borrowing and repayment processes.
