Navigating the dynamics of Mozambique’s downstream

Mozambique

Michel Ussene, group managing director at Mitra Energy, talks to The Energy Year about reacting quickly to customer demand for fuel and the company’s prospects for consolidating its retail fuel distribution network in Africa. Mitra Energy is an African energy company specialising in the trade, storage and distribution of petroleum products and power.

What is your assessment of the evolution of the downstream segment in Mozambique and neighbouring countries?
The downstream business has been very dynamic in the past three years. There was a very rapid acceleration of consumption following the Covid-19 pandemic which caused spikes in demand for refined products. After that came the European armed conflict, which disrupted the global trade flow of crude and petroleum products.
Uncertainty brought tremendous volatility to energy markets, with crude surpassing USD 100 per barrel. Since many markets in Africa are regulated, governments did not want to adjust prices fearing social uprising and increases to the cost of living, so subsidies were introduced. That negatively impacted the cash flow of OMCs [oil marketing companies].
Then there were logistical issues due to changing trade flows all over the globe. Nobody could predict with precision how prices would evolve, and they rose again. Once more, the regulated markets decided not to follow the increases, and that was a very difficult time for operators in our sector. Thankfully, after almost two years, we have achieved some stability.

Can you give us an overview of Mitra Energy’s main services?
Mitra Energy is primarily engaged in the importation, storage and distribution of refined petroleum products. Our main product is diesel because much of Africa is a raw material exploitation platform and many companies that operate in Southern Africa are mine operators that require diesel as fuel for their facilities and equipment.

What is the competitive advantage of Mitra Energy?
Our customer service is very good. We can respond to requests from our clients very quickly, as our organisational structure is simple. This is what has allowed us to enter several markets. We provide a basic product, but supplying it requires high attention to safety. We are consistent and have robust procedures, but we are very fast at the same time.
Service quality determines how deeply you can push into a market, especially when it is regulated and everybody has the same prices. Our structure is what sets us apart, and our efficiency is also a strength in markets such as Uganda which are not regulated and where we can set our prices.

Is Mitra Energy planning to expand its portfolio of services?
We want to become an energy producer and become more involved in the power business. In the next 20 years, global energy production and distribution are going to change substantially. Africa is experiencing the biggest demographic boom in the world. This is a pressing challenge for African governments and regulators because social problems will arise if we continue underinvesting in infrastructure.
We want to become more involved in solar and gas projects. Gas is going to play a very important role in the energy mix. Towards monetising gas resources in African countries, we want to become promoters of development projects. We are participating in two or three projects at the moment, and approaching FIDs on LNG terminals.

Where do you see Mitra Energy in the next five years?
First, we would like to see ourselves involved in power production. Second, we would like to consolidate our downstream presence in at least 18 African countries, with a network of around 600 retail petrol stations. Some will be property stations, but most will be branded. We also want to increase our asset base to be able to develop several projects simultaneously and engage larger oil and energy companies.

Read our latest insights on:

• Mozambique
• Uganda