ENERGY SOLUTIONS

Zambia 2017 | ENERGY & MINING | B2B

In a competitive energy market with price-cutting a regular fixture, a focus on quality and strong relationships will go a long way.

Jason Ullbricht
JASON ULLBRICHT
Vice President-Southern Africa
Jason Ullbricht
Yahaya Yunusa
YAHAYA YUNUSA
Managing Director
Puma Energy Zambia PLC

What have been the key growth areas in the Zambian market?

Jason Ullbricht We primarily focus on two key segments: the mining industry and utilities. When the copper price was at its peak, we benefited from key strategic accounts, such as First Quantum Minerals. In addition, because of the supply of our products through local partners into the market, we also saw growth in our business to smaller scale mines. In 2015, we saw a slight decline in this segment, though our overall business grew from 2014 to 2015. We attribute this growth to the presence we created in-country, namely our strong relationships with local partners and end users. In 2017, mining will continue to be a focus area for Schneider Electric, as will our dealings with utilities. We intend to grow this business primarily through local companies. Complementary to that, we also focus on growing our client mix in the food and beverage industry. This too we focus on doing through our local authorized partners.

Yahaya Yunusa Puma Energy Zambia has been expanding in the retail business in the last few years adding new service stations, and rebuilding some of the old stations, such as the one in Livingstone, copper belt, and in Lusaka, to consolidate and gain more volume out of those strategic locations. We have a budget and target to expand by at least three new stations and three new affiliates every year. Puma has earmarked in its 2017 strategy some strategically located sites within Lusaka that should come on-stream within the year. As for products and services, being a downstream oil marketing company our most popular product remains premium petrol; however, we have also seen steady growth in diesel sales. We sell our fuels through the retail segment, which has about 40% of our business; however, Puma Energy is also a major player in the B2B segment, which includes mining and lubricants, supplying mainly gas oil and lubricants to bulk and industrial consumers of petroleum products. Some of our largest clients include Zambia Railways and Zambia Sugar. We give these companies products on credit, at agreed rates, and they pay us after the duration and expiration of the credit. The B2B market is highly competitive, and it is vital to provide the lowest prices, especially on bulk purchases; otherwise a company is in danger of being encroached by competitors. Puma is also the market leader in aviation, with over 70% of the market in that segment. We have secured contracts with major airlines such as Emirates, KLM, Ethiopian, Kenya, Proflight, and Executive Airlines. Puma Energy supplies the 3 main airports in Zambia, being KKIA Lusaka, Livingstone and Ndola international airports.

What are your plans for the coming years?

JU In 2017, our strategy will be to focus on the traditional side of our business, and then, in addition, to engage more with the end user to understand where the OPEX opportunities are. Following the power deficit, load shedding, and drop in commodity prices, many in the market faced some challenges in 2016. However, on the flipside, many companies cut down on CAPEX and instead spent on OPEX where available. This, therefore, became an opportunity for some, including ourselves. At Schneider, we have a wide product portfolio, allowing us to provide various solutions. For many of our clients, this includes secure power, power factor correction, and energy efficiency solutions. We encourage our customers to undertake energy audits of existing installed bases to understand where their energy inefficiencies exist, and then recommend some of our solutions to resolve these issues.

YY There are a few gaps in our operations that we need to work on. In particular, bringing more services to our filling stations will give us the edge over our competitors. For example, we will install POS machines and improve on the Puma Card offer for cashless customers and also add value for our fleet customers. We are currently discussing innovations regarding mobile money transfers, since we see this as a dominant trend in the market. Puma Energy will consolidate on its value proposition at the stations, mainly the enhancement of customer service within the forecourt, shops, and the various eateries in partnership with international brands, located within the stations. All of these initiatives fall within the area of non-fuel income, and it is an area pinpointed for growth and also consolidation. Apart from increases to our retail network, we have also added value to our service stations across Zambia. These stations are managed through dealers and franchises. Today, we see ourselves as providers of a service, and our network represents more than just the filling stations from the past. We have led the retail segment for a long time in Zambia, and intend to keep this mantel by consolidating our business here, investing where we can to refurbish and modernize stations. Our strategy for the next two or three years will be more aggressive on the retail segment.