At the beginning of 2010 Engen Petroleum selected Petrol Plus as their corporate fleet card system. The system was first deployed in Rwanda where Engen had acquired the local business of Total. The Total TomCard system was excluded from the acquisition and a new fleet card system was needed as soon as possible.
The Petrol Plus (1-Card) payment system implementation in Rwanda had the following objectives:
- Implement a branded private label fuel / fleet card using Petrol Plus platform;
- Promote the fuel / fleet card to commercial car / truck fleets of all size;
- Operate the platform, and commercialize the cards, in-house.
To justify further investments in Petrol Plus for its other African businesses, Engen developed a detailed financial model with the following objectives:
- To establish whether each project is financially justifiable (using discounted cash-flow technique).
- To monitor actual progress against plan so as to enable interventions.
- To measure actual benefits resulting of the investment in the Petrol Plus solution.
The following tasks were performed to justify investment:
- Estimate costs (cash outflows).
- Estimate additional volumes per period and the related gross margin (cash inflows).
- Discount cash flows to back to present day value…
A positive discounted cash flow value means the project is financially justiable.
The following tasks were performed to track the resulting benefits:
- Record actual costs per period.
- Record actual volumes per period.
- Record actual margins, exchange rates, inflation and tax rates, Weighted Average Cost of Capital WACC, depreciation etc. per period.
- Discount cash flows to back to the value at date of investment
and compare to projected value.
Engen concluded that:
- Initial CAPEX and Expenses were below estimates.
- Actual breakeven was after 6 months.
- Sale volumes increased tremendously and exceeded expectations.
- Cumulative benet (after tax and depreciation) was substantial
Engen is an African-based energy group focused on the refining and marketing of petroleum and petroleum-based products, and the provision of retail convenience services, through an extensive network of service stations across 17 countries in Sub-Saharan Africa. Engen also exports its products to more than 30 other territories, mostly in Africa and the Indian Ocean Islands.
In Rwanda Engen has 20 fuel stations.