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Feasibility Studies

Filling Station Feasibility Studies

As the first step in developing a filling station, a feasibility study must be done to determine whether the project will be economically viable. The feasibility study will outline whether there is a market need, identify infrastructure requirements, determine the project costs, includes a financial analysis to determine the financial feasibility of the proposed study site to determine if the desired return on investments could be reached. 

What We Do

U Fuel (Pty) Ltd, an independent consulting company will perform a detailed analytical survey on the feasibility and economic viability of a proposed filling station development.

The aim is to determine if the site is viable for a filling station development. The outcome of this study will determine if the extent of the market demand for a fuelling station development, as well as guide investment decisions on the development mix and type for the specific property. 

U Fuel will make specific emphasis with regards to the influence of the locality of this property as well as the assessment on the Need and Desirability of a Filling Station on the site.

The investigation is based on existing data both published and from past project experience which are augmented with selected and focused primary research. The primary research will depend on investigation and interviews to obtain recent market indicators and relevant industry standards. 

Based on the findings of the study the “Client” would be able to determine the risk factor involved as well as to make logical deductions obtained from this report. 

Planning Approach and Objectives

The planning approach followed in the preparation of the feasibility study and was based on the following aspects: 

  • To provide a plan and document which would be practical, understandable, realistic and enhance the implementation thereof
  • To provide a Feasibility Study that would serve as a guideline or framework in the various decision making processes

The main objectives of this study are:

  • Provide evidence of the suitability of the proposed site for the intended development
  • Determine the market feasibility – determine and estimate the potential market for the products and services that the proposed development is intended to provide
  • The last phase is to determine whether the project satisfies the financial requirements of the parties; Developer, Operator and the Oil Company involved

Use of a Feasibiltity Study

This report will provide details regarding the necessity of appointing qualified professionals such as:

  • The site development plan, building and forecourt plans to be designed by an architect 
  • Costing and economic evaluation to be done by a quantity surveyor 
  • In- and egresses improvement to be determined by a traffic engineer 
  • Environmental Management Plan or Basic Assessment Report to be performed by an Environmental Consultant 
  • A consultant to negotiate the best margins and development agreement with an Oil company

This report can also be utilised for the following purposes:

  • Negotiating transactions with an Oil Company or a Registered Wholesaler for the supply of petroleum products
  • Obtaining approval for financing of the project 
  • Consent for the proposed development activities from the applicable local governing authorities. 
  • As a basis for the relevant documentation to be submitted to the Department of Energy to obtain the necessary licenses

Feasibility Study - Report Outline

The report consists of various segments. Apart from the first segment, which provides the introduction and background, the report contains the following:

This segment provides an insight into the Petroleum Industry which comprises of the institutions, broad issues and trends outside the Filling Station facility over which there is no, or limited control.

This section focuses on the items such as;

  • Socio-economic information – the active and effective acquisition of the filling station dependents upon favourable socio-economic factors as well as the socio-economic profile of the potential catchment area. The section comprises of a number of sub-sections which are: a description of the area, a demographic profile, an economic profile, an assessment of the types of transport used by people living in the area, an analysis of traffic flows in the catchment area and a description of the future developments in the area 
  • Physical and legal feasibility is an analysis of the suitability of the site for the proposed development
  • Marketing feasibility comprises of a study of the demand and supply and the analyses thereof to determine whether the property would be marketable, taking into consideration the socio-economic impacts of the proposed service station. It examines the demand side of the proposed development. This provides a market delineation and demand assessment for the proposed filling station. Specifically, it analyses the location of the proposed development site and traffic flows in the area where it is located. It also describes the geographic extent of the possible demand for fuel and other products and facilities that the proposed filling station is intended to offer. It assesses the key characteristics of the service stations located in proximity to the proposed development site in order to determine their implications for the proposed development. These characteristics include the estimated volumes of fuel sales that they supply and convenience facilities that they provide. It investigates the possible impacts of the proposed development and assesses their intensity. Specifically, the section examines the possible impacts on existing filling stations and on the area surrounding the proposed development site
  • Financial viability – the last phase of the feasibility section is to determine whether the project satisfies the financial requirements of the Operator/Dealer, the Developer and the financial institution.

This section provides a guide and recommendations to the Operations of a Filling Station

This section provides a summary of the main findings and some recommendations for the proposed development, based on the need and desirability, as well as a conclusion on the overall feasibility of the investing into the potential filling station.

This summarises the different scenarios used to determine the most viable option and makes certain recommendations with regards to the development.