Ghana Petroleum Industry: William Tewiah Dives into the Dynamic Vision and Achievements of ZEN Petroleum

Interview with William Tewiah, Founder and CEO of ZEN Petroleum

How do you perceive the current state of the petroleum industry in Ghana? Can you share your insights on the trends and developments within the sector?

The downstream petroleum sector in Ghana collectively deals with approximately five and a half billion liters annually, translating to roughly five and a half billion dollars. About 70% of this constitutes the retail and B2B markets. Specific sectors, such as mining, account for around 330 million liters annually, making up approximately 6% of the total volume. While there are other smaller segments like marine gas oil, the majority, nearly 4 billion liters yearly, is consumed by retail customers and B2B businesses.

Can you provide an overview of the sector? Who are the key players?

The sector is structured with bulk distribution companies responsible for importing petroleum products into the country. While there were three major players about 15 years ago, today there are approximately 40, with a significant portion of the market dominated by the top five or top 10 companies. These bulk distribution companies source products from major international suppliers like BP, Trafigura, and Vitol. Upon import, they store the products at the main terminals in Tema and Takoradi. BDCs sell to oil marketing companies (OMCs). The largest OMC is Goil, a state parastatal, with around 200 other OMCs in the market. Considering Ghana’s market size, the presence of 200 OMCs raises questions about the necessity of such numbers. Notably, the bottom 50 OMCs collectively hold a 5% market share, while the top 10 command close to 80%. This setup involves bulk distribution companies importing products and selling them to oil marketing companies, who, in turn, distribute them to end customers. Retail distribution involves filling stations, mining sites for the mining sector, and aviation installations at the airport for aircraft services.

Do you anticipate a shift in the market structure, with a reduction in the number of players and a trend toward larger groups? What is your perspective on the future of the oil industry?

Logic suggests that market consolidation should occur. However, that is just logical reasoning. The regulator has to play a role in this if they aim to limit market size. In an industry with numerous players and a significant minority holding a very small market share, the regulator needs to address whether they are capable of effectively regulating these businesses. Unfortunately, that is beyond our control. Since the deregulation of the downstream sector about eight or nine years ago, the market has been consolidating. In a deregulated environment, companies must differentiate themselves from competitors. Unlike before, when prices were essentially the same everywhere, regardless of size, there was always a market. Now, customers are making informed decisions about their purchases. This shift allows players like us and some competitors to differentiate based on factors such as quality, price, quantity, and service.

Could you give us an overview of ZEN Petroleum?

ZEN Petroleum commenced its journey in 2010, initially focusing on the mining sector. An opportunity arose as mines faced significant challenges in procuring clean diesel for their equipment, consuming approximately 330 million liters annually, constituting about 6% of the downstream sector. Notably, Gold Fields, a prominent mining entity in Ghana, encountered such difficulties, providing the gateway for our involvement. We initiated by securing a contract with Gold Fields to supply 50% of their volumes, marking the inception of ZEN Petroleum. Our growth trajectory has since made us the largest fuel supplier to mining companies in Ghana.

Interestingly, during our early days, only multinational companies supplied fuel to mines, seemingly for reasons unbeknownst to me. The perception prevailed that only multinationals could meet the unique service requirements or demands. This sparked my curiosity, considering that these multinationals sourced fuel from Ghanaian BDCs and utilized Ghanaian transporters. Thus, my journey with ZEN began as a pursuit of understanding why such services were seemingly reserved for multinationals. This curiosity still drives us, signifying the continuous exploration of possibilities.

Initially focused on mining, we expanded our footprint to Burkina Faso, Mali, Guinea, Liberia, and Côte d’Ivoire. While supplying substantial volumes to mines in Mali showed promise, logistical challenges and regulatory constraints compelled us to reassess. Subsequently, we shifted our focus to the deregulated retail space in Ghana, seizing the opportunity that emerged. This strategic move marked our entry into the retail sector in Ghana, where our market share solidified. Presently, revenue distribution between mining and retail is 50/50. Initially, it was 100% mining, but with a dedicated focus on retail over the past five to six years, we have doubled in size annually, with retail now constituting 50% of our volumes. Looking forward, we foresee the potential for retail to account for around 80% of our volumes, showcasing significant growth prospects in that sector.

What sets ZEN Petroleum apart? What are your key competitive advantages?

In the retail space, when we ventured into our first filling station, we posed that very question internally. We wanted to understand what makes ZEN stand out, compelling someone to drive past 200 other oil marketing companies to choose us. So, we began modestly by acquiring a retail outlet in Takoradi. Our approach was simple: do everything possible without focusing on a specific strategy related to price, quality, or quantity. We aimed to give it our all, providing 200%. Without grand events or parties, we quietly switched on the lights and commenced operations. On the first day, we sold 700 liters, gradually increasing to 1000, 5000, and eventually 20,000.

Customer feedback highlighted a common concern – the distance they traveled to reach a retail outlet. This prompted me to consider that we might have something valuable to offer. Although it was hard to pinpoint precisely what made us unique, we adhered to basic business principles: competitive pricing, accurate fuel quantity, and quality. Ensuring customers received the right quantity was a significant challenge, with some outlets falling short. Despite perceptions, there was no magical additive in our fuel; we simply provided what customers paid for.

In terms of quality, our diesel adhered to the same European specifications used for mining companies in the Takoradi area. Gasoline was sourced from the same suppliers as other oil marketing companies. Service excellence was a priority, with a customer-centric approach influencing even restroom aesthetics. We focused on every detail, striving to deliver the best possible experience.

Starting with a single outlet, we now boast 48 retail locations, maintaining the same approach. It is an ongoing journey of curiosity, consistently giving 100% effort. Our customers seem to recognize something special in what ZEN Petroleum offers. So, our commitment remains strong as we explore how far we can go. That is the essence of what we do at ZEN.

Looking forward, as you continue your development, are you actively seeking investors, and if so, what makes your company an attractive investment?

We are open to strategic partnerships. As previously mentioned, BDCs import fuel from traders, and these traders often seek a natural short for profitable trading. We believe we can provide value to traders such as BP, Trafigura, Vitola – other entities operating from places like Geneva – looking for a natural short in a West African country. The more volumes we handle, the more appealing it becomes for them. In such scenarios, it is a strategic win-win partnership where both parties contribute unique strengths. While we do not aspire to become a dominant trader with an extensive balance sheet, traders hold significant positions not only in West Africa but globally. We are keen on strategic partners who can add value to our operations, not necessarily those solely providing capital, as money is not a significant challenge. Borrowing is available when justified by a sound business case, and we also reinvest a substantial portion of internally generated funds into our expansion.

We seek partners aligned with the downstream sector business, where mutual value addition is possible. This could include traders like BP or even other strategic partners who can enhance what we do. For instance, a bank interested in outlets, especially within the non-fuel revenue aspects like lubricants and shops. Another example could be a partner interested in the real estate we own across the country, bringing additional value to the table. In summary, we are actively looking for partners who can contribute meaningfully to our business and vice versa, fostering a strong and mutually beneficial partnership.

The scale is indeed extensive. Are these companies predominantly Ghanaian?

Some are, and some are not. Regarding traders, there is not a Ghanaian trader in that league. In fact, it is challenging for any trader, regardless of nationality, to compete with these global giants who operate on an international scale, managing substantial product movements worldwide. Their market positions are formidable, leaving limited room for competition. So, you are correct; they are not Ghanaian. As for banks, we collaborate with both Ghanaian and local banks. In non-fuel retail, including shops, it is conceivable for a Ghanaian entity to participate. While the retail sector does see foreign involvement, there are significant Ghanaian businesses present as well. Hence, it could be anyone.

Could you update us on your current projects? What significant developments are you currently working on?

Presently, we are in the process of constructing a fuel facility at Cardinal mines in the north. Most mines, including Cardinal, require a secure supply, necessitating on-site storage facilities. This is an area where ZEN Petroleum has extensive experience. We have previously built the largest fuel facility on any mine in West Africa, specifically at Gold Fields Tarkwa, and it is fully owned by us, sitting on our balance sheet. This capability adds substantial value for our mining clients. Currently, we are working on a similar facility near Bolgatanga in the north, and we have just completed another one, a 500,000-liter fuel facility. These are two of our ongoing projects. Additionally, we have several retail strip stations under construction. We prefer constructing our own filling stations because it allows us to incorporate various features such as double-wall tanks, flame arresters, and vapor recovery systems. We prioritize investments in health, safety, and the environment (HSE). When the opportunity arises to build on a brownfield site, we take advantage of it. So, these are some of the projects actively in progress.

Can you share a success story or an achievement that you are particularly proud of at ZEN Petroleum?

Everything about ZEN continues to fascinate me, even to this day. It all began as a journey of curiosity, wondering how far we could go, whether we could survive for one month, one year, or two years. Now, 14 years later, we are still here with a team of 1000 Ghanaian staff, entirely managed by Ghanaians. The quality and integrity of our staff never cease to amaze me. One notable initiative was a few years ago when we launched a women-only logistics business. We faced challenges in getting the right quantity of fuel to our mining customers, and despite struggling for years, we could not understand why. Dealing with third-party suppliers was part of the issue. So, we decided to bring it in-house. At the time, we thought, if the same people drive the trucks, the results will not change. So, we selected five women who had never driven trucks before, enlisted the Ghanaian army to train them, and within seven to eight months, they were on the road with 10 brand new Scania trucks, delivering to our mining customers. Our losses almost disappeared overnight. It debunked the notion that women could not drive trucks once and for all. We expanded the team to 50 drivers, and it still gives me goosebumps to see them on the road. When we first came up with the idea, I was not even sure if I knew what I was doing. It was a leap of faith because there is no biological reason why a woman cannot drive a truck. It was seen as a novel and crazy idea, and to this day, it remains a standout achievement. The energy and enthusiasm from the drivers when you see them on the road are incredible. They have even joked about being ready to fly planes, suggesting we start an airline. That initiative stands out as absolutely fantastic, even after all these years.

Could you share some insights into your CSR activities? The women empowerment initiative is a commendable example. Are there any other initiatives that you take pride in?

We are deeply committed to women empowerment. We firmly believe in the untapped potential that women possess. Unfortunately, in many cases, women and young girls face disadvantages from an early age. We see this as a significant resource pool that remains untapped. It is not about finding fault with men, but from a CSR perspective, the data is clear. When you provide $100 to a woman, she tends to invest more in health and education than her male counterpart. Therefore, by actively welcoming women into our workforce, we not only benefit from their direct contributions but also leverage these broader advantages. Moreover, women often face unequal opportunities, and we are dedicated to addressing this imbalance. Currently, we take pride in having a board with three women members, and we proactively seek opportunities to include more women. Our goal is to ensure that our workforce mirrors society, aiming for a balanced representation of 50% male and 50% female.

Let’s delve a bit more into the human resource aspect. Could you elaborate on that?

Managing human resources is a challenge for any business, primarily because finding the right people is always a struggle. This is especially true when it comes to finding the right women, as opportunities for them may not always be readily available. In such cases, it is crucial to handpick individuals, boost their confidence, and make them aware of their capabilities. Often, a lot of work needs to be done to bring out their potential, as it may not have been recognized before. However, we are making significant progress, and I believe that the more initiatives we undertake, the easier it becomes. When you witness a board with a 50% representation of women, it serves as encouragement for more to join. Seeing women excel in roles traditionally viewed as male-dominated further motivates others to step forward. So, indeed, we are making substantial progress, and it has a significant impact.

What are your thoughts about the future of ZEN Petroleum? How do you envision it?

When you initiate a business on your own, it becomes an extension of yourself. However, for outsiders, they perceive the business as an individual entity, a name. Take someone like Richard Branson, for instance; when he founded the Virgin Group, it was synonymous with Richard Branson. In three years, my aspiration is for people to see ZEN Petroleum as an independent entity, equipped with substantial management depth and a pool of talent capable of steering it beyond my involvement. I am actively working on an exit plan. At some point, I aim to step back from the business and witness a new management team taking the reins, propelling ZEN to new heights. I find it crucial to debunk the perception, particularly prevalent in this region, that if a business founder steps away, the business collapses. It is a disservice to the over 1000 people working here, as they are highly competent, and in many cases, better than me in terms of what they can deliver. I envision reaching a point where our strong management team rightfully receives credit for their contributions, allowing me to take more of a backseat. Being an entrepreneur, I remain interested in other ventures. Currently, I am exploring opportunities in AI, a field that intrigues me. So, in three years, I hope to see myself as, for lack of a better description, less central to ZEN’s operations, giving credit to the capable team we have built. Simultaneously, I would like to begin exploring other endeavors. However, as a company, we acknowledge that there is still significant growth ahead; we are nowhere near 50% of our long-term potential. There is a lot of maturing and evolving left for us. The opportunities for ZEN Petroleum as a company are vast, and we have a long journey ahead.

What is your inspiration? What drives you to do what you do?

My philosophy in life is to try to knock a few doors down and give it 110%. Opportunities do not come along very often, so when you sink your teeth into something, you have to give it everything you have got. I leave very little room for complacency because that is usually the killer for most businesses. Complacency sets in when a big-man mentality comes in, and you start thinking you are a big player who can walk on water. That is when the reality check kicks in. I feel very privileged to have the opportunity to express myself and be involved in growing a business. I am humbled to have built a business that now involves a lot more people than just myself. You want to give it everything you can because it is also a lot of fun. Starting something small and being able to grow it is something I enjoy enormously. Ghana has a lot of talent, often overlooked. The quiet ones are usually the talented ones, and as they say, empty barrels tend to make a lot of noise. Spotting talent and developing it is like finding a rough diamond. Ultimately, it is people that make money, not just big ideas or dreams. So, I enjoy that aspect a lot. I like to challenge the status quo, question it, do things differently, and challenge perceptions. At ZEN, we aim to challenge the perception people have of Ghanaian businesses, wanting to be seen as a business that can compete with any other business worldwide, whether multinational or local.

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