Fuel distributors profits rebound
Lewanika Timothy | Monday October 12, 2026 06:00
The improvement comes against the backdrop of a turbulent year for oil markets, with the Iran war pushing up international costs. However, as half-year results trickle in on the bourse, it is clear that distributors are seeing stronger earnings due to changes to the fuel pricing framework and the sale of stock at higher prices than what was expected.
Engen has raked in a half-year P52 million profit before tax in the six months ended June, compared with P10 million a year earlier, whilst the distributor's revenue rose 18% to P1.6 billion.
In a statement on the local bourse, directors apportioned the improvement in its books to changes in the slate framework that were made by the industry regulator earlier this year alongside broader cost containment measures.
“Net Profit Before Tax increased by 418% during the period under review compared to the previous year. This was mainly because of the margin increase and revision that was made to the transport recovery element of the slate in late 2025,” directors said.
The slate is the balancing mechanism within Botswana’s regulated fuel pricing system; it tracks differences between recognised fuel supply costs and the amounts recovered through regulated prices, allowing those differences to be addressed over time.
When recognised costs exceed recoveries, an under-recovery arises. The framework therefore allows government to cushion motorists from immediate price shocks, whilst providing a mechanism for managing the resulting gap.
For distributors, the transport recovery component matters because it determines how recognised delivery costs are recovered. Alongside an industry wholesale margin increase effective February, its revision helped strengthen Engen’s earnings.
Despite an improvement on the bottom line, Engen’s retail sales channel declined 23%, reflecting weaker consumer buying power, whilst three service stations left its network in April, with a further knock expected as the company has to shave off 67 outlets as part of a merger transaction.
Commercial sales increased 35%, providing a counterweight to the pressure at the pumps.
Another player in the industry, Kwa Nokeng Oil, forecasts annual net profit of P381 million for its June-ended 2026 financial year, against P189.7 million in 2025. Revenue is projected to grow to P3 billion, up from P2.5 billion.
Kwa Nokeng’s gross margin shows that they were selling stock at a better margin than what they bought it for in previous quarters, with the company's GP growing from 5.8 percent in 2023 to 12% in 2025, despite falling revenue. Kwa Nokeng additionally expects elevated global fuel prices to continue to support a profitable year for the business.