Filling station boom raises market saturation alarms

Lewanika Timothy | Monday June 8, 2026 06:00

The study comes as the country’s retail fuel sector faces growing concerns of overcapacity, with instances where some filling stations receive licences and open a few metres away from each other.

Statistics Botswana data on transport and infrastructure shows that since the third quarter of 2023, the number of first-time registrations in the country have gone up on a quarterly basis. The trend means the traditionally accelerated growth in the country’s vehicle population, has slowed down.

Analysts say the retail fuel industry may be heading towards a damaging oversupply, with the proliferation exceeding national demand, as the country has over 400 licensed filling stations.

Botswana Energy Regulatory Authority (BERA) CEO, Never Tshabang, revealed to BusinessWeek that whilst the regulator encourages an open market entry policy, it had noted that proliferation of sites was concentrated and a source of concern.

“Of late, the proliferation has become a cause for concern as it is not commensurate with the demand or economic growth,” he said in written responses to BusinessWeek. “Although this is mostly in urban and peri-urban areas, it is concentrated only in certain areas.”

The authority will, this financial year, conduct a locational analysis and concentration assessment of filling stations in Botswana, to develop a model that can be used by land-allocating authorities and BERA for allocating filling-station plots and issuing licences.

The model is expected to help authorities determine when a location has reached saturation and establish an acceptable distance between filling stations.

Quizzed on whether there is a market oversupply of product into the country, BERA said that there was no risk of oversupply and the only threat was job losses should sites fail to operate profitably.

According to BERA, sales volumes in retail sites are splitting, leading to a squeeze in profit margins. The retail sites are seen to be competing for the fewer vehicles on the road, with not much differentiation to offer, as prices are regulated by the authority.

The regulator further said that the filling station franchisees were constantly negotiating for higher margins in order to try to stay afloat.

“The challenges brought up by this are that sales volumes are further split between players and erode profitability. “Since margins and prices are regulated, filling stations end up requesting higher margins in order for them to remain afloat, and this can result in increased cost of product, which can ultimately affect pump prices. “Some integrated operators end up offering discounts to lure customers, thereby disadvantaging those without the benefit of full participation in other phases of the value chain,” the regulator revealed.

The oversupply of sites in the market was also leading to operators offering discounts in a bid to attract wheels to their stations, something which is not sustainable in the long run.

When retail sites multiply, usually the market recovers through consolidation. Those with capital buy out the struggling operators and manage margins better through the pooling of volumes and capital. However, the regulator revealed that this creates a monopoly risk in the future.