• Gas stations in Mexico are good business
• It is a long term investment

By: Abel Martínez Luna

A gas station “is a business.”

That is the opinion of Abril Moreno, director of P21 Energía, “If it is not profitable, everything will be written off, gas stations will be closed, but remember that petrol is a centave business.”

Pemex indicates that profit margins on fuel costs in its franchises range from 10 to 15%; For every 100 pesos invested, the capital is recouped and earned up to 15 pesos. The petrolheads, although they claim more competition, also admit positive margins.

Roberto Díaz de León, a gas station entrepreneur, points out, “In exceptional cases, you can get a gross margin of around 10%, but as the number of gas stations increases over time, the volume also decreases.”

Viewed from this point of view, it is profitable, but there is a significant investment involved. A small gas station, with two pumps, requires a minimum of 10 million pesos: in space rental, construction, equipment, management and permit payments, the Pemex franchise alone is estimated at 159 thousand pesos.

“This is a very safe business, but you have to comply with the guidelines of various authorities starting from the Ministry of Energy, the Secretary of the Economy who through the Profeco regulatory department monitors you; Ministry of Finance and SAT, Corporate Secretary. Labor and others have been very specific in this sector, the Energy Regulatory Commission is the one that will give you permission as long as you’ve covered the environmental part that regulates you.”

This is a long term investment, licensing can take more than a year and capital recovery up to 7 years.

“If the permit is given to gentlemen, the duration is 6 to 8 months, for Pemex, if the permit is from the private sector, it can take up to a year or maybe a year and a half,” he explained. April Moreno, director of P21 Energy.

A station must sell 25 thousand liters a day to make a profit, as the average profit per liter ranges from 50 cents to one peso, which includes salaries, expenses and other concepts.

It is said to be a great business, because gas stations are anchors for other paid services, from toilets to shops or restaurants.

In Mexico, 7 out of 10 entrepreneurs focus on fuel as their main business, but in developed countries, 8 out of 10 entrepreneurs focus on businesses around gas stations, a trend that will continue to grow in the country.

Díaz de León predicts “No, do not be surprised that as time goes by we will see service stations where not only petrol and diesel are sold but also multimodal points to sell LP gas, natural gas, hydrogen and even service hybrid and electric vehicles”.

Currently there are 13,448 gas stations with 340 brands, but 53% come from Pemex. The Mexican states of Jalisco and Veracruz have the highest numbers.