Open A Pump Station In Thailand

[lusty]

Dear All, I need to dig out all possible info about opening a petrol station in Bangkok or upcountry. Farang with cash +Thai partner should be the set-up.

Are there any restrictions or special laws? Or is it like opening any other company? I will go to the Ministry of Commerce next week. Meanwhile, anybody got any first hand experience to share?

Thank you so much for your attention and help.

[soundman]

Link to PTT information here.

[torrenova]

I thin there is or certainly was someone here who had experience of this type of thing outside Thailand and now (or at least did) seems to be making a success of it. Something about getting 7/11 in for the retail shop, smaller units for rent on the site. Try a search.

[pitcha]

Dear All, I need to dig out all possible info about opening a petrol station in Bangkok or upcountry. Farang with cash +Thai partner should be the set-up.

Are there any restrictions or special laws? Or is it like opening any other company? I will go to the Ministry of Commerce next week. Meanwhile, anybody got any first hand experience to share?

Thank you so much for your attention and help.

it would pretty much be the same process when opening a business in Thailand. I would suggest to consult The Thai Board of Investment (BOI) - your investment and business information source for Thailand.

Here's the link: www.ThailandBOI.com (BOI Application Service For Foreigners Investing in Thailand)

Any other help from the private sector, DO let me know.

Good luck and don't forget to put a smile on your face when you meet them (they'd love to help).

Edited April 25, 2009 by pitcha

[p_brownstone]

Contact any of the Major Oil Companies in Thailand, if you have a good site they will assist in setting everything up for you.

Be aware that the Retail Profit Margin on Gasoline and Diesel is very low - whch is why every Station has other sources of income - 7/11 or other C-Store, Car Wash, Fast Food franchise etc..

Patrick

[alenhan]

Opening gas station is simple when you have a lot of cash or your own money.

Budget are

3-5 millions for small one. (baht)

5-10 million for medium, and bigger one, bigger money.

Since gas station is one of the businesses that bank won't give loan ( or very difficult ) like in shrimp farming.

However, if it's all your money, then it's possible.

Something you need to think about like...

Location and location. This will tell you how many possible customers you will have. cars, trucks, motorbikes, boats, farms, and so on.

Competition around. If there are other gas stations already in the area, can you make customers come to yours?

Brand. This will help customer feel confident with your gas. Very important in BKK, but not in upcountry (you need a good look though).

Minimart is a must for gas station. Lots of station find that profit comes from mart rather than gas. Since gas has a very small margin per litre. If turn over rate is low, chances are you'll make less money from gas. I think most of gas stations still stay in business because of income comes from other sources like minimart, rental fees but not from gas.

Clean toilet. this will help more people stop by at your place even they don't refill gas, but minimart will get money from them.

Inside info obout the gas price. This will help you make money a lot like you do business in stock market. Remember two years ago when the gas price surged from twenty something to forty something it also closed down more than 3000 gas stations across the country.

.... Operating gas station is like buying stock in the market except gas stock is a must buy if you want to stay in....

Good luck.

[ut54]

I agree with you to work business in Thailand if you love to,but gas station in my opinion benefit from petrol very small margin and in Thailnd need a gas station service boy or girl right now not easy to find someone that want to work in gastation.

I would suggest you should invest some thing about car service .Such as engine car repair or body car repair .Especially body car repair .

[soundman]

Some figures doing the retail petrol business with PTT in Thailand:

Retail margin 1.05B per litre +/- 0.05B depending on which depot (klang) you take delivery from.

less delivery cost - example: our pump is 150km from Sri Racha depot - delivery cost is currently 0.25B per litre.

less selling cost - averages 0.35B per litre for staff, utilities, maintenance & other overheads.

Profit margin - 0.45B per litre.

Note: PTT structures it's nationwide pricing so that all retailers have approximately the same margin (0.80B per litre) after delivery costs.

Typical sales:

Small local community pump - 3k - 6k litres per day. Profit from sales @ 5k litres equals about 2000B per day.

Large Highway pump - 15k - 30k litres per day. Profit from sales @ 20k litres equals about 9000B per day.

It is hard to work out an actual cost for a petrol station, all locations are different.

Our example (pump on a major inter provincial road, next to a factory complex.)

Land - current valuation - 10 million Baht. PTT service station package - 6 million Baht. All other buildings and property development - 5 million Baht. This includes staff rooms, border fence & 14 rental shops excluding the 7/11. Add to that the (smart) option of a petrol truck - another 3 million Baht.

Call it 20 million Baht to get into a business selling 12k litres per day.

Note on petrol sales and price fluctuations - PTT informs its retailers 5.00pm the preceding day to a price fluctuation. An example of a major problem is ordering your petrol, which you have to do irrespective of any anticipated price change, delivery comes usually late (after price change announcement) in the ordering day, price goes down by 0.80B, you lose 0.35 per litre for either 15k or 35k litres depending on the capacity of your truck.

Staff: Pump hands easy to find, high turnover and frequent problems with cash dis-appearing. Cashiers - hard to find - especially with guarantor. Some will try all sorts of scams to increase their salary.

Lubricants:

Good money to be made selling lubricants.

However, as with many things PTT do to keep control, be very careful about the monthly sales quota you agree to in your contract. PTT will ensure that you only have access to the retail pricing package for their lubricants & will do nothing for you if a Tesco opens next door and sells the same products cheaper than you can buy them for because of Tesco's access to wholesale buying rates. PTT will actually fine you for not maintaining your quota.

Credit Cards:

Even with the best available rates, credit card charges will consume nearly half your net profit from petrol only sales (based on retail price of 30B per litre). We do not accept credit cards, however, we have installed an ATM so that credit card customers can withdraw cash to pay for their fuel. It is hardly surprising that many customers are un-willing to do this becasue of the charges involved.

Rental spaces:

In our pump, we generate nearly as much profit from renting retail space, including renting the 7/11 to CPALL, as we do from petrol sales. We have the option of buying the franchise rights to 7/11, however, for all the extra money invested (3 million including cash guarantee), work and headache, we have decided not to do that, especially since you cannot sell alcohol which appears, from previous experience, to be where nearly 1/4 of 7/11's profit comes from.

Jobbers:

The scourge of PTT and their monopolistic ambitions. Jobbers are individuals, companies or syndicates with mountains of cash who use the oil market much as other investors use the share market for short term trading positions. Flexible buying of your retail oil needs through jobbers can significantly enhance your profitability. Generally speaking your price will be 0.20B - 0.60B cheaper per litre buying through a jobber. Be aware that each different jobber will have different prices on different products at different times due to their collective bulk purchasing weeks in advance.

The problem with placing all of your oil orders through jobbers is you will run foul of your contract with the company whose logo you represent and, in PTT's case, will fine you for not selling your quota, followed by more serious ramifications depending on your finance structure.

Warning - The petrol business is a business only for those who have money. Do not even think about this business without having at least the buy in price of the pump package, and preferably owning the land out-right.

If you have a really good location, PTT will be more than happy to finance the costs of building the pump. They do this with an ulterior motive which I cannot go into here. If PTT finances your pump, they will impose un-realistic sales quotas, with stiff penalties for non-compliance.

If you want to get into the petrol business in Thailand, pay for it in cash, or at the minimum, independant financing. DO NOT use company financing.

To partly answer the OP's question: Our pump is a small part of the family business, a 30 million Baht registered limited partnership. I have percentage in that partnership. I did not have anything to do with the original opening of the partnership & have only been a recent addition, which was a two minute formality at the provincial office.