From a relatively unknown brand with modest operations of just 53 fuel retail sites and a turnover of R2 billion, the local black-owned Royale Energy Group has grown to over 83 fuelling stations and a turnover of R10.5 billion in just seven years. With a  series of triumphs and strategic acquisitions in the fuel and gas industries, Royale is emerging as a modern-day David ready to take on the global fuel goliaths.

As one of the country’s largest independently-owned petroleum wholesalers and distributors, Royale Energy has experienced meteoric growth since business maverick Mpho Dipela took ownership in 2015.

As a director and shareholder in the group, Dipela notes that the company has set its immediate sights on seizing no less than 5% of market share through a blend of value innovations, diversification, and strategic acquisitions. “This strategy has served us extremely well so far, allowing us to seize new opportunities largely overlooked by other major players, while building a solid business by carefully managing risks,” he says.

A case in point has been the rapid rise of its Viva retail sites, located in small towns in rural areas across the country, including the Northern Cape, Limpopo, Mpumalanga, the Free State and Gauteng.

However, not only has Viva capitalised on the opportunities created by the high demand for fuel in these underserviced communities, it has also heightened the consumer appeal of its filling stations by partnering with popular and trusted brands such as OK Mini Market, KFC and Barcelo’s. Notably, the brand was also the first in South Africa to introduce solar-powered filling stations to overcome electricity and infrastructure constraints.

“The rural economy represents an enormous untapped market with very little competition, enabling us to sell far greater volumes than would be possible in saturated market spaces. In terms of rands per square meter, property is significantly cheaper than the cities, and operational expenses are lower, which means that our profit margins are much higher compared to the bigger cities,” Dipela explains.

“Beyond this, investing in these areas also represents an important opportunity for us to play a meaningful role towards nation-building, helping to develop these economies and create job opportunities in geographically remote areas. Right now, Royale has 61 Viva petrol stations and 22 Caltex fuelling stations around the country that support more than 1,500 breadwinners alone.”

Royale Energy employs over 4,000 staff members in total through its entire value chain.

In addition to the roll-out of its Viva brand, Royale Energy expanded its local footprint by purchasing storage facilities with a total capacity of 27 million litres from BP in 2017. This has enabled Royale to better manage supply chains to its own network, and diversify its income by selling to direct customers and independent suppliers.

Likewise, Royale Group turned its attention to the future through securing its value chain and diversifying its holdings. Royale established engineering firm Pro-X Projects, keeping a 90% shareholding and sharing 10% with its engineering team; bought out 100% of logistics company Freightcor; acquired a 33% stake in LNG (Liquefied Natural Gas); and purchased a 10% shareholding in Oryx South Africa, the third largest gas company in the country.

“We also own a property portfolio to better manage and run the premises we own, mitigating our risk factors. Additionally, we are also able to use our portfolio as security to expand our business,” states Dipela.

Looking forward, gas forms a major part of the group’s future expansion plans.

“The world is changing and gas represents a major opportunity for South Africa, especially amidst power challenges and the rising demand for clean energy. We expect Africa to transition to clean energy over the next few decades, and our goal is to establish a local company that can compete at the same level as international players.”