BY KABELO SEITSHIRO
The newly appointed Total Botswana, Managing Director, Diego Mtshali has supported the move by the government to increase fuel prices, adding that fuel prices were kept low and stagnant in Botswana for long while global fuel prices kept going up.
There was fuel adjustment this week following another earlier this month, and Mtshali is of the view that this move will help close the gap between true market prices for fuel and the local regulated (and subsidized) fuel prices. He believes that the gap between market prices and local prices is still big.
“About P1.2 billion is owed to the fuel industry because of the subsidies. Fuel prices are dictated by what is happening in big trading hubs,” said Mtshali.
On the international standards, Mtshali said globally, fuel prices are determined by supply or demand factors in key oil trading hubs. He said Southern African countries including Botswana tend to use Mediterranean, Arabian Gulf and Singapore as sources for product pricing. He stated that thereafter, freight and overland transport costs are added to arrive at the landed price per location. He said the movement in these factors affects the landed price of fuel and, thus, the price of fuel at the pump in Botswana. He is of the view that these factors have nothing to do with the National Petroleum Fund (NPF) issue that the country is grappling with.
Meanwhile, one of his top priorities as the new Total Botswana boss, is to solve the company’s major problem of low market share in Botswana.
He believes that what he needs to do is to improve the retail network of the business, commercial business and also having dedicated team that handle both. Although he could not disclose further, he said the company is currently eyeing new major clients in the country.
He revealed that Total Botswana’s market share in the country is less 10 percent adding that it is measured through sales of different companies by the Department of Energy.
“In 2018, this was the year to lay the foundation to solve the problem. In September we finalized our new structure to beef up the team that I found,” said Mtshali.
Quizzed on the business strategy, Mtshali stated that it is key to improve their business to business and also to increase their stake on lubricants business. He spoke of good interactions with Botswana Energy Regulatory Authority (BERA) and he expressed satisfactory about fuel specifications discussions and also how much the country should have in terms of fuel capacity.
“There are issues of fuel smuggling in the country and with strong BERA, this is likely to be handled well,” said Mtshali.
“Namibia and Mozambique routes for fuel transportation were expensive so we are only suing South African refineries. Fuel storage here for Total Botswana is not a problem and our reliability is at 100 percent,” said Mtshali.
Across the border, in South Africa, he stated that the company has a stake in National Petroleum Refiners where they own 36 percent of the finery adding that moving fuel from there to Botswana makes economic sense. He stated that their source of fuel supply is 350 KM away Botswana and that they cannot afford for Botswana to run out fuel.
“We are doing well with NCI, which is a reseller of our fuel and also our lubricants are also doing well through huge network of Choppies,” said Mtshali.
Total Botswana has 2.5 million litres fuel storage capacity at the depot in Gaborone which supplies all their sites across the country.