General Petroleum ran its African operations from its offices in Dubai, United Arab Emirates, since 2006. But in 2013, it decided to consolidate its African operations in Dar es Salaam, Tanzania, where it established a blending plant.

We had a long history in Africa even before building our own plant in Tanzania, said Irfan Khan, general manager of operations in Tanzania. Earlier, customers from Africa contacted our U.A.E. office to buy finished lubes; so, we already had relationships here.

GPs Blend Plant

LubesnGreases toured General Petroleums Dar es Salaam blending plant in July to gain an understanding of its operations and the companys plans for the future. The plant has the capability to produce 60,000 metric tons of lubricants per year. It includes five storage tanks for base oils totaling 500,000 liters from which it supplies its production lines.

Khan said the company will add two more tanks, extending its capacity to more than 1 million liters. Each tank has a boiler that heats the base oils, making them easier to mix with additives. In addition, every kettle is fixed with a filter that filters the additives before the finished lubricant goes to the filling line, said Khan.

The plant has five filling lines, two automatic and three semi-automatic installations. The plant is also equipped with a laboratory to analyze lubricants to ensure compliance with quality standards. Khan said General Petroleum patronizes local manufacturers for its plastics and container molds to support local industry.

According to Khan, the blending plant typically runs a single shift and employs 100 people. When we were running double shifts, we had 150 employees, but we changed to a single shift because two shifts were not economical for us, he said.

Khan related that before General Petroleum could operate its blending plant in Tanzania, the National Environment Management Council (NEMC) had to verify the companys ability to comply with applicable environmental standards. It took more than six months to finish the environmental assessment, he said.

He added that waste control is particularly stringent. The NEMC licenses third parties to collect waste and issue certificates of compliance to operators. The collectors, said Khan, dispose of the waste in a manner that is safe for the environment.

Tanzanian Market

Khan explained that Tanzanias lubricant market is buoyant and has a bright future. There is a lot of potential in terms of new industries coming to Tanzania, and the mining sector is thriving, he said. In addition, Dar es Salaam is now a cargo transit center.

General Petroleum has targeted the local market for growth. Khan said the companys Tanzanian operation has many advantages for African customers because they dont pay an import duty as when they imported products from Dubai. We have an additional advantage because lubricants blended in Tanzania are not subject to the 25 percent import duty imposed by most East African countries, he said.

General Petroleums African market is dominated by automotive lubricants, and it distributes its products through distributors in all East African countries, said Khan. We supply to our distributors, who in turn supply the retail markets in various countries.

Khan said one of General Petroleums advantages in the marketplace is its close ties with clients and distributors and the support it supplies to their businesses. We are close to our distributors in Tanzania and East Africa, and we provide small trucks for our distributors to deliver products to retailers, he said. We respond to their challenges in a timely fashion. Whatever happens, we are there to help out with customers.

Khan noted that General Petroleums distributors are attracted to its products because they come with a guarantee for safety. We go door-to-door to commercial firms, shop-keepers, truck users and say: If you use our products, we guarantee that if anything happens, we will buy you a new car. And they are satisfied.

Khan related that the Tanzanian lubricant market is 99.9 percent API Group I, but added that General Petroleum recently launched a Group II+ product. However, he said, the challenge for higher-quality lubricants is that the market is driven by price rather than quality. When I talk to somebody about Group II, they say: I dont know Group II or Group I. What I know is that I need cheap oil, Khan said.

Competition

According to Khan, there are three prominent lubricant blenders in Tanzania, but he does not feel General Petroleum competes directly with them. Ive never felt a threat from any single company. Our prices are in the right range. We are fine with the competition, no problems, no issues, Khan said.

Khan declined to put a figure on General Petroleums share of the Tanzanian lubricant market but added that the company is doing well. I am not sure of the exact figure, but I feel we have good market share, he said.

He projects that General Petroleum will be better positioned to play a larger role in the Tanzania market in the years ahead. Our projection for the next five years is very positive, and we feel there is a bright future in Tanzania because the economy is booming, Khan said.

Khan feels that the critical challenges to blenders are the thriving trade in substandard products and the counterfeiting of popular brands. He said that the Tanzania Bureau of Standards is being pushed by local blenders to help stem the rising tide of fake and counterfeit lubes in the market.

One result of this effort is the recently published list of lubricant brands that do not meet acceptable standards for lubes in the country. The approach by the TBS will help all companies that engage in honest business practices. It will squeeze local blenders to be more careful, said Khan.

However, he added, the tax system is not favorable for blenders. For instance, when I import base oils from Dubai, I pay a value added tax that I am supposed to get back when I export products. But the government has yet to fulfill this part of its promise to many blenders in the country, Khan said. According to Khan, importers of base oils pay a VAT of 18 percent, importers of finished lubes pay a 25 percent import duty and 18 percent VAT, and importers of additives pay 10 percent import duty and 18 percent VAT