…as once-thriving business struggles to survive
Rethabile Pitso
SMALL-scale paraffin traders are bemoaning what they describe as unfair treatment by major fuel distributors, accusing them of sidelining Basotho traders in favour of a small group of mainly Chinese-owned businesses allegedly monopolising the industry.
Their woes are worsened by the fact that they do not have the capacity or are not licensed by Petroleum Fund to fetch paraffin from South Africa.
One of the affected traders, Phakamile Xingwana – the founder of Stallion Fuel Deliveries, said the paraffin business, once viewed as lucrative, had become increasingly difficult to sustain due to supply challenges and rising operational costs.
Mr Xingwana alleged that major suppliers, including Tholo Energy and Engen, were limiting access to paraffin for Basotho-owned resellers while continuing to supply preferred clients.
According to him, the situation has left many local operators struggling to survive.
“Paraffin is regulated under the Petroleum Fund, meaning we are expected to resell it at a fixed profit margin of M1.40 per litre. For us to make a profit, we need access to wholesale prices offered at Tholo and Engen depots,” he said.
“However, we are increasingly being told there is no stock available whenever we try to purchase, while others continue receiving supply. As a result, many Basotho-owned tanks in villages remain empty.”
He claimed the arrangement appeared designed to edge Basotho traders out of the market and leave the industry dominated by foreign-owned wholesalers.
Mr Xingwana also cited high operational costs as another major challenge facing local traders.
“The business looks attractive from the outside, but once you get into it, you realise it is not as profitable as people think,” he said.
“The smallest storage equipment costs around M75 000 and can hold about 5000 litres. Even if you sell all the stock, the profit margin is only around M7000, which is not enough to cover expenses such as salaries and transport costs.”
He added that supply delays were making matters worse.
“You might sell out within a few days, but restocking becomes a challenge because suppliers delay deliveries. Customers then lose trust in your ability to provide the commodity consistently.”
Mr Xingwana further noted that many traders struggled to save enough income during winter — when paraffin demand is highest — to sustain operations throughout the off-season.
“The business requires strong financial discipline because the money generated in winter should help sustain operations until the next season. Unfortunately, many small operators cannot survive through summer without using those proceeds.”
He also accused Chinese-owned wholesalers of charging excessively high prices when Basotho traders attempted to buy stock from them.
“Chinese traders are able to combine resources and buy in bulk, giving them leverage we do not have. When we try to buy from them as a last resort, they refuse to offer affordable wholesale prices,” he said.
“It is unfortunate because Basotho businesses continue shutting down after investing heavily in the sector.”
Another trader, who requested anonymity for fear of victimisation, echoed similar concerns.
“This business has become extremely cut-throat. We used to have several distributors, but now we are left with only a few major players who appear unwilling to work with smaller traders,” he said.
He said some former suppliers had exited the paraffin market altogether.
“Lesotho Petroleum has shifted focus to other business avenues while Senqu is under liquidation. Tholo Energy recently announced it would temporarily stop supplying paraffin due to market conditions and the ongoing war, but even before that announcement, it had already prioritised a select group of clients.”
The trader alleged that Engen was also prioritising long-standing and large-volume customers, making it difficult for new entrants to secure supply.
“They rarely reject you outright, but they make the process extremely difficult until you eventually realise they are unwilling to work with you,” he said.
He further claimed that some Basotho dealers had been denied supply over concerns about road access, while businesses in similar or worse locations allegedly continued receiving deliveries.
The trader also blamed legislation governing the energy sector for limiting opportunities for small operators.
“Only businesses with importation permits are allowed to distribute fuel products, and the requirements are too demanding for small traders,” he said.
“For example, you need storage facilities capable of holding up to half a million litres. That is beyond the reach of most of us, meaning we are forced to depend on existing suppliers.”
He called on authorities to intervene, arguing that the shortage of supply at reseller level contradicted recent assurances by the Energy Ministry that paraffin would remain available despite recent price hikes.
“Just a few weeks ago, Basotho were assured there would be no shortage of paraffin in the country. Yet many community tanks are empty and businesses are collapsing,” he said.
“If we try to buy from Chinese traders, the prices are too high, but we cannot increase our own prices because retail prices are regulated.”
Meanwhile, the Lesotho Times tour of several retail outlets revealed that some traders were charging above regulated prices, with paraffin selling for as much as M27 per litre. This compared to the legal price of M22.50 set by Petroleum Fund.
Efforts to obtain comment from authorities were unsuccessful.
Ministry of Energy Public Relations Officer, Molisenyane Tau, said the publication’s questions would be referred to relevant departments.
Petroleum Fund Public Relations Officer, Rorisang Mahlo, also requested time to respond in writing.
Tholo Energy chief executive, Thabiso Moroahae, referred this publication to a public statement issued last week announcing the company’s decision to “temporarily refrain from supplying paraffin due to current market conditions and negatively regulated pricing”.
Efforts to get a comment from Engen were unsuccessful as their office phone rang unanswered.
Paraffin prices skyrocketed in March this year due to the Iran/Unites States war. Before then, a litre of paraffin cost M13. It first increased by M13.30 per litre and again by M1.20 early this month. With the government subsidy of M5 per litre, the price now sits at M22.50.
