Daily Times

KARACHI: Hi-Tech Lubricants Limited (HTL), a leading oil distributor in the country, is considering entering the oil marketing space as the company plans to set up 160 retail outlets across the country by the end of 2020.

According to industry sources, the company has gotten permission from the Oil and Gas Regulatory Authority (OGRA) to apply for 26 pumps, while the HTL aims to setup 50 OMC outlets this year, 60 outlets next year, and another 50 outlets in the year after.

“It would be setting up storage along the way, which would make it easier for the HTL to attain the necessary permissions for additional pumps”, said sources.

It is important to mention here that the OGRA requires companies seeking to enter oil marketing operations including setting up petrol pumps to have storage facilities in the province or region where they seek to set up operations.

Currently, the HTL has storage capacity of 1,050 tons, based on which the permission for the 26 pumps has been granted. HTL aims to set up an additional 3,000 tons of storage in Punjab and 2,000 tons in KP.

The company has constructed a blending unit in Lahore on an area of 29 acres, with an annual capacity of 35,000 tons. The company aims to commence blending operations locally this year, which would allow the company to combat shortages of base oil, in addition to catering to industrial demand (such as that for hydraulic oil and spindle oil) where HTL’s products are priced higher than the competition.

Currently, the company imports blended lubricant oil, which carries a higher duty (20%) in comparison to the import of base oil (10%). The commencement of blending operations at the HTL blending plant would allow for the company to improve its margins, along with reach of the product.

Sources further said that motorcycle lubricant market share of the HTL remained low, as the dealer channels needed for the purpose are spread out across the country, making it difficult for the company to reach this market.

The company currently has three express centres functional, which are located at Dharampura, Garden Town and Gulshan-e-Ravi in Lahore city. The company is currently in the process of setting up Express Service Centres in Karachi.

HTL expects 60 percent of the revenues generated at the centers to be that of lubricant sales, and the rest for miscellaneous products such as Tires, etc. HTL expects to boost its Lubricant oil sales (both ZIC and HTL brands) through its Express Service Centers and OMC outlets.

Published in Daily Times, February  21^st 2018.