Senior Business Correspondent

A RETAIL sector summit for the liquid fuels industry is being mooted as a response to the increase in the financial failure of many retail service stations.

The imminent entry of Sasol and PetroSA in the retail service sector also makes the challenge of dealing with the already oversaturated retail service station market in the country more urgent.

One in three services stations in black townships and rural areas fail.

Addressing a workshop on opportunities and challenges for women in the petroleum retail industry in Sandton recently, Minerals and Energy Deputy Minister Susan Shabangu said there was a need to urgently put in place proper retailer development mechanisms.

Shabangu said the sector needed a retail development agency just like the supplier development agency government was in the process of establishing.

She said some of the problems lay within the nature of the sector, as well as the features of the retail market in SA.

There were close to 49000 retail sites (including commercial and industrial operations) in the country, Shabangu said.

Start-up costs for a retail fuel outlet were relatively high. "If a site fails, much of the initial costs cannot be retrieved ," the deputy minister said.

Shabangu said that like any retail operation, petroleum retail operations were "high detail-intensive".

Many sites were pumping below a national average break-even volume of 270000l each month, she said.

African Minerals and Energy Forum chairman Maurice Radebe warned delegates of unscrupulous operators selling unprofitable sites at a bargain.

"It's not worth it if you consider how much you will spend in costs to just revive it," he said.

Radebe said people had to read and understand clearly what they were signing when entering into an agreement to run a service station.

Right of trade was usually limited to at least five years, he said.

Sep 09 2003 08:41:52:000AM Patrick Wadula Business Day 1st Edition