A service station usually involves more than one petroleum licence. The site licence relates to the premises from which petroleum products are retailed, while the retail licence authorises the retail business operating from that licensed site.
The distinction is important when developing, buying, selling, leasing or restructuring a service station. Property rights, site rights, the operating business and the retail licence may sit with different parties.
What is a site licence?
The site licence is connected to the premises. It forms part of the regulatory framework governing the location from which petroleum products are sold to members of the public.
In practical terms, the site position may involve:
- Ownership or lawful use of the property
- Land-use and municipal approvals
- Site layout and access
- Environmental and technical requirements
- Development status
- The relationship between the site owner and retailer
The site licence should not be treated as interchangeable with the retail business.
What is a retail licence?
The retail licence authorises the retailer operating from the licensed site. The South African Government states that a retailer may purchase petroleum products only from a licensed manufacturer or wholesaler.
The retail licence is therefore connected to the operating entity and the business conducted at the site.
Retail-business considerations include:
- The legal entity operating the station
- Ownership and control
- Supply and branding arrangements
- Employment and operating systems
- Turnover, volumes and non-fuel income
- Licence conditions and annual information
Why both licences matter in a transaction
A petrol-station sale may involve one or more of the following:
- Sale of shares in the operating company
- Sale of the business assets
- Transfer or replacement of the retailer
- Sale of the property
- Assignment or replacement of the lease
- Change in branding or supply arrangement
- Change in control or majority ownership
The commercial agreement must be aligned with the licensing pathway. A buyer should not assume that purchasing the pumps, stock or company automatically secures the full legal position required to operate.
New development versus existing station
A new-to-industry service-station project is different from acquiring an existing operating station.
A new development may require:
- Property and land-use assessment
- Traffic and market analysis
- Need and desirability evidence
- Environmental and technical work
- Site and retail licence applications
- Funding and development planning
- Supply and branding engagement
An existing-station acquisition must assess the current site and retail licences, conditions, ownership, property or lease rights, financial performance and proposed transaction structure.
Application process
The Department of Mineral and Petroleum Resources publishes DMPR-39 for a site or retail licence application. The official government process includes submission to the relevant regional office, publication of a notice when directed and provision of proof of publication.
The government service page states that a decision must be made within 90 days from receipt of proof of publication. This is a process reference and should not be treated as a guaranteed project-completion date.
Annual retail information
Once licensed, the retailer must submit annual information using DMPR-33. The licence remains valid while the business operates, subject to applicable law, licence conditions and continuing obligations.
Annual information should be based on accurate business and licence records. Material changes should be assessed rather than simply reflected informally in a later submission.
Questions buyers and developers should ask
- Who holds the site licence?
- Who holds the retail licence?
- Who owns the property?
- Who holds the lease and for how long?
- Which entity operates the business?
- What exactly is being sold or developed?
- Which licence applications, changes or conditions apply?
- What must occur before the new operator can trade?
UFuel service-station support
UFuel assists with site and retail licence applications, feasibility studies, valuations and petrol-station transactions. Review the site and retail licensing pathway or the petrol-station transaction service.