Nedbank’s partnership-based finance model helps to transform the fuel sector | Infrastructure news

Transformation in the fuel sector is a key imperative, particularly in ensuring that barriers to entry for black entrepreneurs are reduced, allowing for greater representativity and ownership, says Prithivan Pillay, head of client value propositions at Nedbank Commercial Banking,

While transformation in the sector has moved slowly, Pillay says the bank considered alternative funding models to lower barriers of entry for new fuel sector entrants enabling them to own their service station.

This has been a great success, with Nedbank facilitating 41 change of ownership transaction to enable these aspiring individuals to acquire their service stations since 2020.

The transformation journey has had its challenges, from raising funding, accessing the correct financial instruments, placement of qualifying candidates to the support and interventions offered by participating stakeholders.

“Over time, we established that we need to form strategic partnerships with key industry stakeholders that can mitigate against shortcomings and making it easier for businesses to remain sustainable,” he adds.

One such successful partnership model says Pillay, has been with Kwazulu-Natal-based transformative strategic partner PetroCONNECT led by entrepreneurs Sbonelo Mbatha and Mark Harper.

PetroCONNECT a company developed with the purpose of playing a pro-active role in helping all players in the energy industry join forces to become part of the industry wide solutions are required of us all at this time. They enjoy developing innovative and creative solutions to solve business problems and are passionate to change the way the fuel sector operates

Through the partnership, PetroCONNECT provides training, ensuring that funding candidates understand what is required to successfully manage a fuel station through a rigorous screening, training, monitoring, and mentorship programme.

Pillay says that PetroCONNECT supports candidates with a back-office management tool system, labor and legal aid,  on-site operational interventions, including stock l audit , daily controls and processing, payroll account and statutory services  finance structuring and assistance .

Pillay indicated that there are currently around 7 000 fuel station sites, which include white sites or emerging fuel brands (unbranded petrol stations owned by small players outside the franchisee networks of major oil companies). Of these, less than 30% is owned by B-BBBEE entrepreneurs.

According to Pillay, as per Nedbank’s differentiated funding model for transformation, a prospective owner should have 20% to 30% available upfront. of the purchase price of a fuel station, which could cost in the region of R5 million and above,

The owner of an Engen franchise south of Durban, Nomfundo Mkhabela, is but one of many examples highlighting transformation success.

“I’ve always loved Engen; I don’t know whether it’s the color, I don’t know what it is about Engen, I think I love the offering that they have.  And then, by God’s Grace, I got one,” she says.

Nomfundo credits PetroCONNECT with bringing her to Nedbank.

“They made sure that the deal happened. And they didn’t end there. On the finance side of running the businesses, you don’t know everything as a dealer. They make sure that they mentor you, make sure that your management accounts are proper, they would suggest things when they see that you’re going out of the way to make sure that they pull you back so that your business is profitable,” she says.

“I am happy that I got to partner with PetroCONNECT. I wouldn’t be where I am if it wasn’t for them.”

Furthermore, having a Nedbank commercial banker, Kiran Ramjathan, on her side has been a godsend.

“After the business was looted in the 2021 riots, I wrote email after email to say, how can you help me? I need to restart my business. What can Nedbank help me with? I know I’m a new client.  I haven’t been there for long, but he said: “Don’t worry, Nomfundo, we will sort something out”.

“I can phone him at any time; there will always be an answer that comes from him. It’s a bank I will stay with forever; I’ll always be green”. she adds.

Chemical engineer, Thandi Thabethe, owner of BP Che Guevara Road in Durban, says. At the same time, she understands and has worked in the petroleum sector because of her profession; the past few years have been challenging.

“There are external challenges of running a service station, such as the COVID-19 pandemic, the floods, and riots, all of which have reduced the garage’s footprint. Add the petrol price hike; these were the external factors affecting us.”

No business has been immune from load-shedding, she adds. But she is about resilience, making a difference in the community, and ensuring that her service station adds value.

“I believe that if there’s a vision planted in you, and the vision is to own a service station, you must pursue it. By pursuing it, you must research what is happening in the industry, especially the macro-economic effects, and speak with experts in the industry, like PetroCONNECT,” she says.

“When I first received a letter of appointment from BP, I was excited – knowing that I would use Nedbank because of the bank’s partnership with BP. It was quite a journey,” she adds.

“Petro-CONNECT and Nedbank were supportive in making sure that I gathered all the information required as part of the process to make sure that I get this business.”

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