NEW FILLING STATION / TRUCK STOP DEVELOPMENT PROCESS

The first main objective in the process of developing a new filling station, is to obtain Site and Retail licenses form the
Department of Energy, in the quickest and most cost-effective manner, and in order to lodge an application for these licences,
the following are required:

• Feasibility Study – This is the very first requirement and must be done to determine the short and long-term economic
viability of the intended development.
• Terrain layout design – Basic layout plans to indicate the proposed position of buildings, underground storage, road and
parking areas configuration, service connections, and stormwater drainage.
• Local authority approval – Municipal / Tribal authority
• Road access approval - must be obtained from the authority in control of the particular road.
• Environmental approval - according to the requirements of the National Environmental Management Act
• Rezoning of land – (if applicable) Application by a town planner
• Supply and branding agreement - from a licensed fuel supplier

Prodeo Petroleum Consultants offers a one-stop service which brings relevant specialists with applicable experience
together, to conduct the complete process for our clients, up to the point where actual construction of the intended filling
station and/or truck stop can commence

FEASIBILITY STUDY
Whenever a new filling station or truck stop development is planned, there are two fundamental questions that must be
asked, and answered, namely:

* Would the proposed filling station development be economic viable ?

and

* What are the probabilities of obtaining approval for site and retail license from the Department of Energy, as required
by the Petroleum Products Act ?

These questions can only be answered by way of a proper feasibility study. Whenever a prospective developer approaches a
Fuel Company, The Department of Energy, Local or Provincial Government, Sanral/Roads Authority etc. the first and most
important requirement is that a Feasibility Study must first be conducted. The final decision that most of these respective
authorities will make in terms of the respective applications, will to a great extend rely upon information as placed on record
in the feasibility study.

Traffic Count, Volumetric Analysis and Economic Viability Study.

The first step is to obtain a traffic count at the position of the proposed development. From the traffic data, a volumetric
analysis using industry benchmarks and standards relating to the typical demographic environment of the intended
development is carried out to determine the reasonably expected turnover potential of a filling station, in terms of “litres of
fuel sales” at the location would be.

The second step is to form a picture of total expected income and operating expenses of the intended filling station, by using
industry standards and benchmarks, as well as the guidelines of the recently announced Regulated Accounting System (RAS)
including other envisaged income sources, such as lubricants sales, and convenience shop turnover, in order to forecast a
potential net operating profit from the intended business, once completed.

Next, an estimation of the expected development cost of the filling station is compiled, which measured against the potential
net profit income takes the economic viability study to a conclusion, depicted by way of a Net Present Value and Internal
Rate of Return calculation and assumption report. The results of this report are critical in the final approval of a Site and
Retail license application at the Department of Energy.
Site Assessment and Trading area analysis.
This stage of the study focuses on two major issues:

A site assessment, to determine if there are any obvious (on record) conditions and/or reasons that environmental approval
and a land re-zoning application from the Provincial or Local Authority may be declined. The approach would be to eliminate
potential obstacles, by investigating whether they currently exist, and/or may appear in the future.

Physical site investigations and desktop studies, are conducted to investigate:

• Zoning and physical conditions like Servitudes, Power lines, Gas or water pipelines, Local Authority town planning,
Proximity of schools, hospitals, roads, railways etc.
• Environmental conditions like Wetlands, Conservation areas, Geo-hydrological conditions etc.
• Heritage, cultural and archaeological details, like Graveyards, Ancestral interest, Battlefields, Historical settlements etc.

It must be noted that the desk-top study is not an Environmental Impact Assessment but merely an investigation of existing
known records and/or conditions, aimed at assisting the Developer with a decision whether to proceed with a formal EIA
process or other studies.

The final step would be to form an opinion of the probability of a successful Site and Retail license application at the
Department of Energy. This is done by way of a basic trading area analysis to firstly, determine the existing availability of fuel
and related services in the envisaged area from which the intended development would draw customer support, and
secondly to determine the need and desirability of such a new development and the intended service it will render to the
specific community. The probability and potential weight of formal objections from other fuel retailers in the area to a Site
and Retail license application is also looked at.

TERRAIN LAYOUT DESIGN

Once the feasibility study has been completed, and if the results indicate sufficient positive potential, and if the decision is
made by the developer to proceed with the process, the first step would be to appoint an Engineer to establish a basic terrain
plan, which should indicate the position of buildings, and underground storage facilities, as well as access road and parking
areas layout. The terrain plan should also contain a basic storm water plan, basic sewerage plan, and envisaged water and
electricity supply.

LOCAL AUTHORITY APPROVAL

The appointed Engineer is normally instructed to approach the local Municipality and apply for “in-principle” approval of the
proposed development on hand of the terrain layout plans. Certain requirements or restrictions may be imposed in
accordance with the Integrated Development Plan of the Municipality.

ROAD ACCESS APPLICATION

The appointed Engineer also handles the application for road access (on hand of the proposed road layout configuration as
contained in the terrain plan) from the relevant authority (Municipal / Provincial / SANRAL) in control of the particular road/s.
Please note that a Traffic Impact Assessment may in some instances be required, which must be conducted by a competent
Traffic Engineer.

ENVIRONMENTAL APPROVAL
Any proposed development (construction and operational aspects) of a new filling station and/or truck stop shall inter alia
require compliance with the requirements of:
* Constitution of the Republic of South Africa (Act 108 of 1996) (as amended);
* National Environmental Management Act (Act 107 of 1998) (NEMA) (as amended);
* NEMA EIA Regulations (2014);
* National Heritage Act, 1999 (Act 25 of 1999);
* National Environmental Management: Air Quality Act, 2004 (Act 39 of 2004);
* National Environmental Management: Waste Management Act, 2009 (Act 59 of 2009);
* Hazardous Substances Act, 1973 (Act 15 of 1973);
* National Water Act, 1998 (Act 36 of 1998);
* Occupational Health and Safety Act, 1993 (Act 85 of 1993); and
* Provincial regulations and local bylaws;
The development of filling station and associated infrastructure may trigger certain listed activities in terms of the
Environmental Impact Assessment Regulations, which will determine the type and extent of studies and required steps of
compliance that must be conducted.

Aspects like the storage capacity of petroleum products, presence or proximity of wetlands, watercourses, declared
conservation or heritage areas as well as a variety of others, may also trigger requirements.

Depending on the position and size of the development, as well as other conditions, the applicable provincial authorities may
require that an Environmental Impact Assessment in the form of a Basic Assessment Report (BAR) be conducted, or
alternatively exemption from an Environmental Impact Assessment may be obtained, by way of a Compliance Scoping
Report.

REZONING OF THE LAND

An application for rezoning must be brought by a competent Town Planner and will be subject to the conditions of the
integrated development plan of the specific applicable regional or municipal authority.

SUPPLY AND BRANDING AGREEMENT

As development and branding consultants for several petroleum companies, Prodeo will discuss the results of the feasibility
study and the information of the site and intended project with the relevant development specialists of some petroleum
suppliers, obtaining advice and input from them at an early stage. Choosing the right fuel supplier is of utmost importance,
and the number of projected litres of fuel that the intended new filling station will potentially sell, is one of the main factors
that will determine the amount of capital investment that any fuel supplier would be willing to inject in a new filling station
development. Prodeo has established working relationships with various major and smaller fuel suppliers, and we can assist
the developer to negotiate the best supply and branding package for the new filling station development.

SITE AND RETAIL LICENSE APPLICATION

Upon Environmental, Road Access and Rezoning approval, the often long and complicated process of application for Site and
Retail licenses at the Department of Energy follows. These applications require special skills and experience, and in most
cases, input of a Specialist Attorney. Prodeo Petroleum Consultants have a long and excellent working relationship with such
specialists who are well known and respected in this field, with an exceptional success record in specifically site and retail
license applications.

Project Financing
The prospective developer should be able to carry the costs of the abovementioned studies and applications from own cash
sources, since it is normally not possible to obtain financing for that.

Most developers are normally able to obtain sufficient financing for the physical construction cost, and although the fuel
supplier could make a substantial contribution, it is generally accepted or expected that the prospective developer should at
least have some own unencumbered capital available. Once the site and retail licenses have been approved, the developer
should be able to obtain financing for up to 60% of the development cost, with relative ease.

The National Empowerment Fund (NEF) and some other institutions may offer financing packages and options to Historically
Disadvantaged South Africans.

Please note that project financing is not a function or service offered by Prodeo.
ESTIMATED COSTS

Here below the estimated duration and cost of the respective studies and/or services (subject to official quotations)

ESTIMATION
DESCRIPTION DURATION COST (+-)
Feasibility study 2 - 3 months R50 000 up to R70 000
Terrain layout plans & Local authority approval 3 months R45 000 up to R65 000
Road Access application 4 - 6 months R40 000 up to R75 000
Land rezoning (if applicable) 6 months Up to R50 000

Environmental (please note: ONLY ONE of the following 2 studies will be required)
Environmental Compliance Scoping Report (exemption) 2 -3 months R35 000 up to R50 000
OR
Basic Assessment Report (EIA study) 6 -8 months R220 000 up to R400 000

Site & Retail license application 6 - 8 months R 60 000 up to R120 000

Please note that the above estimations represent the maximum that a prospective developer should expect to pay and is
applicable anywhere in South Africa.

Subject to specific location, and other factors, Prodeo may be able to arrange substantial discounts from most of our
contracted specialists.

SUMMARY
Understanding the intrinsic working of the retail fuel market and the regulatory nature thereof is extremely important for
any current or prospective fuel retailer. The recently introduced Regulated Accounting System (RAS) which was designed and
structured to create greater parity in the application of wholesaler and retailer margins as well as the compensation for the
property owners’ expenses, is a complex and ever-changing environment. It is important for the retailer as well as the
property owner to understand the RAS processes, benefits and responsibilities that are applicable to them respectively, in
order to gain optimum advantage.

Although we go to great lengths to ensure a proper investigation of the site conditions, neither Prodeo nor any of its
development partners, can ever guarantee approval of any application (Road Access / Rezoning / Environmental / License or
any other)

Likewise, all calculations and forecasts in the feasibility study are based on industry data and statistics, but no guarantee
whatsoever of the success or profitability of a filling station that is developed is given or implied.

Once the decision is made by the land owner/developer (on grounds of a positive feasibility study) to proceed with a formal
development process, Prodeo Petroleum Consultants can assist with a negotiation of a supply and branding agreement with
a petroleum company who is perfectly geared for new filling station developments, provided that they make economically
viable sense.

Prodeo Petroleum Consultants render the above services anywhere in the Republic of South Africa.
 Prodeo Petroleum Consultants (Pty) Ltd
www.prodeo.co.za

Sales / Branding / Development / Licensing / Valuations of

Filling Stations + Truck Stops throughout Southern Africa

DEDICATED CONSISTENT FOCUSSED

GAUTENG OFFICE:
Jan Olivier snr
Centurion
E-mail: olivier@prodeo.co.za - Mobile: 072 927 0048

WESTERN-CAPE OFFICE:
Jan Olivier
Mossel Bay
E-mail: projects@prodeo.co.za - Mobile: 079 796 2762