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HEATONVILLE PETROL FILLING STATION

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					              HEATONVILLE PETROL
                     FILLING STATION
              THE NEED, DESIRABILITY AND SOCIO-ECONOMIC
                               IMPACT ASSESSMENT




                                                   JULY 2010




                                                                      PREPARED BY:

GBS Environmental Consulting
P.O. 743
Dundee 3000
                                                                      Urban-Econ Development
Republic of South Africa
                                                                      Economists
Tell: 034 212 3660

Fax: 086 575 7605
                                                                      P.O. Box 50834
                                                                      Musgrave 4062
                                                                      Tel:    031 202 9673
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                                                                      Fax:    031 202 9675

                                                      Urban-Econ Development Economists
TABLE OF CONTENTS
1. Introduction ........................................................................................................................................ 3
    1.1 Purpose Of The Study ................................................................................................................. 3
    1.2 Site Location ................................................................................................................................ 3
    1.3 Description Of The Proposed Development ................................................................................ 6
    1.4 Consultation Process And Data Collection Methods ................................................................... 7
    1.5 Outline Of The Report .................................................................................................................. 8

2. Description Of The Catchment Area .................................................................................................. 9
   2.1 Identifying The Catchment Area .................................................................................................. 9
    2.2 Socio-Economic Profile Of The Catchment Area ...................................................................... 10
    2.3 Synopsis .................................................................................................................................... 17

3. Market Supply Analysis .................................................................................................................... 18
    3.1 Location Of Existing Filling Stations .......................................................................................... 18
    3.2 Volumes Sold By Existing Filling Stations ................................................................................. 22
    3.3 Facilities Provided By Existing Filling Stations .......................................................................... 22
    3.4 Implications For The Proposed Development ........................................................................... 23
    3.5 Synopsis .................................................................................................................................... 23


4. Market Demand Analysis ................................................................................................................. 24
    4.1 Market Demand For Fuel ........................................................................................................... 24
    4.2. Effective Demand...................................................................................................................... 25
    4.3 Synopsis .................................................................................................................................... 31

5. Impact Assessment ........................................................................................................................... 32
    5.1 Current Fuel Sales Volumes Per Month, 2010 .......................................................................... 32
    5.2 Impacts On Existing Filling Stations .......................................................................................... 33
    5.3 Future Fuel Sales Volumes Per Month, 2015 ............................................................................ 35
    5.4 Other Impacts ............................................................................................................................ 36
    5.5 Synopsis .................................................................................................................................... 38

6. Conclusion ........................................................................................................................................ 39




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                                                                                                         Urban-Econ Development Economists
1. INTRODUCTION

1.1 PURPOSE OF THE STUDY

The purpose of this study is to assess the feasibility of developing a filling station at the Old Drive-in
site, opposite the Heatonville turnoff to Bukhanana in Ntambanana Local Municipality. The
assessment is divided into two main parts. The first part one is a Needs and Desirability Assessment,
which comprises Market Delineation, Market Demand and Market Supply analyses. The second part
of the assessment deals with the socio-economic impacts of the proposed development.


1.2 SITE LOCATION

The proposed development site is located in Ward 24 of uMhlathuze Local Municipality, which falls
within the uThungulu District. Its exact location is the Old Drive-in site, approximately 400 metres east
                                                         1
of the Heatonville turnoff leading into the P253 . It is situated about 6.2 kilometres north-west of
Empangeni, along the Main R34, which runs between Empangeni in uMhlathuze Local Municipality
and the R34/R66 junction in Nkwalini, uMlalazi Local Municipality.

Figure 1 provides an aerial view of the proposed development site and surrounding areas. It illustrates
that there are rural settlements on the south, south western, south eastern and north eastern sides of
the proposed development site. The closest ones are those located on the south western and south
eastern sides of the site.




1
                                                                                   ̊                    ̊
    The geographical co-ordinates of the proposed development site are 28 ̊ 43´ 46 .34S and 31 ̊ 49´ 47 .30S.
                                                          3


                                                                               Urban-Econ Development Economists
Figure 2 below shows the location of the proposed development site, together with a 2-kilometre
radius around it. Specifically, it shows places or areas that may provide a potential market for the
services that the proposed filling station intends to provide. They include the rural settlements and
commercial farming areas that surround the development site. As shown in the image, several
buildings are located within a 1-kilometre radius of the site. Most of these buildings are located on the
north-eastern side. They include the Empangeni Milling (Pty) Ltd, which immediately adjoins the site
to the west.


The insert provides a zoomed-in picture of the proposed development site. The three arrows illustrate
the point of entry to the site from the R34 road. Across, on the other side of the R34, is the Ngqwatayi
Railway line. As illustrated in the picture, the two run parallel to each other. The Ngqwatayi Railway
Station is located diagonally across from the site. The picture also shows that the R34 and the P253
meet about 400 metres hundred metres south-west of the site.




Figure 3 below provides an illustration of the location of the townships and rural settlements located in
close proximity to the proposed development site. They fall within Wards 24 to 28 of uMhlathuze
Local Municipality, Wards 7 and 8 of Ntambanana Local Municipality, and Ward 13 of Umlalazi Local
Municipality. They include the following:

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                                                                        Urban-Econ Development Economists
 Enyembe, Mtengu, KwaNobonya and Sigisi on the south-western side of the proposed
  development site,
 Matshana on the southern side,
 Ngwezelana on the south-eastern side,
 Bhejane on the eastern side, and
 Ntabinamasi on the north-eastern side.




The proposed development site occupies Lot 235 of Empangeni in Ward 24 of the uMhlathuze Local
Municipality. Apart from Empangeni Milling and the Nqgwati Railway Station, noticeable places in
proximity to the site include:


    Qhubandaba and Ebingoma primary schools on the south-western side,
    The Mankwanyeni Lutheran Church and the Kangiko Primary School on the south-eastern side,
    The Qalakabusha Correctional Facility (prison) on the eastern side,
    TICOR SA (mining establishment) north-eastern side, and
    An industrial estate on the north-eastern side, which is not yet occupied.



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                                                                        Urban-Econ Development Economists
Figure 4 below illustrates the location of each of these establishments in relation to the proposed
development site. The locations of the former are marked with dots, while that of the latter is marked
with a star.




1.3 DESCRIPTION OF THE PROPOSED DEVELOPMENT

The proposed development is a filling station. It aims to serve all traffic, including light and heavy
vehicles travelling along the R34 between Empangeni south-east of the development site and the
R34/66 junction south-west of the site. The filling station is also intended to provide service to vehicles
leaving the P256 access road and other access roads in the area to join the R34 and those leaving
the R34 to join these roads. In addition to the fuel facility, the proposed development consists of the
following:

   A hard-surfaced fuel dispensing forecourt consisting of four islands, each with five diesel and
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    petrol pumps: The forecourt will also comprise a 315 m canopy for light motor vehicles and taxi,
                                                              2
   A hard-surfaced fuel dispensing forecourt that has a 240 m canopy for trucks and a pump island,
   Five underground petroleum and diesel storage tanks that can hold 23 000 litres each, providing a
    total of 115 000 litres of storage,
   A truck stop facility,
   Offices occupying 30 square metres,

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                                                                         Urban-Econ Development Economists
   Thirty surfaced parking bays, two of which are for the disabled, and a service bay for delivery and
    refuse purposes,
   An ATM,
   A fast-food outlet occupying 200 square metres and a yard covering 138.2 square metres,
   Wash-up areas and ablution facilities/change rooms occupying 180 square metres of land,
   Surfaced roadways for access to the property and for servicing infrastructure on the property,
   Security cameras that are compliant with industry standards,
   An entry/exit point off the R34 road, and
   Storm-water infrastructure, sand, oil and grease separators for potentially polluted run-off from the
    site, and water, electricity, storm-water and sewerage reticulation.


1.4 CONSULTATION PROCESS AND DATA COLLECTION METHODS

The Information used in this study was collected through a consultation process that involved:

   Telephone Interviews: Information was collected through interviews with operators of various filling
    stations located along the R34. Most of them are in Empangeni. These operators were seen as
    potential competitors of the proposed filling station.


    Various businesses that generate traffic within the study area were also surveyed telephonically.
    Representatives of some schools and institutions located in close proximity to the proposed
    development site were also interviewed.


   Document Review: Various strategic government documents and reports were consulted during
    the research process. They include the following:


    -   uMhlathuze Municipality Integrated Development Plan (IDP) Review
    -   uMhlathuze Spatial Framework Plan, Status Quo Report, 2007.
    -   Ntambanana Municipality Integrated Development Plan (IDP) Review 2009/10,
    -   Ntambanana Spatial Development Framework 2008,
    -   uThungulu Integrated Transport Plan (ITP) 2005, and
    -   uThungulu Public Transport Record 2003.

   Desktop Research: Desktop research was undertaken to collect some of the economic and social
    data and information.

   Databanks: Economic and social data used in this study were sourced from databanks and
    government departments. The former are Statistics South Africa, Quantec Research and KwaZulu-
    Natal Department of Transport’s KZN Freight Transport Data Bank. Data were also from strategic
    documents and other publications on economic and social development in Ntambanana and
    uMlalazi local municipalities, and the uMhlathuzi District.

   E-mail Correspondence: Some of the documents used in the study were collected through e-mail
    correspondence with officials from various government departments, including the KwaZulu-Natal
    Departments of Transport.
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                                                                        Urban-Econ Development Economists
   Site Visit: A trip was taken by the study team to the proposed development site for the purposes of:

    -   Identifying the areas that are likely to be affected by the proposed development,
    -   Identifying the locations of the potential competition of the proposed development, their
        distance from the development site, and
    -   Deepening understanding of the potential catchment area.

   Information was collected through observation during this trip.

1.5 OUTLINE OF THE REPORT

The report proceeds as follows:

Section 2 presents the socio-economic profile of the potential catchment area. The section comprises
a number of sub-sections. They are; a description of the area, a demographic profile, an economic
profile, an assessment of the types of transport used by people living in the area, an analysis of traffic
flows in the catchment area, and a description of the future developments in the area.

Section 3 provides a market supply analysis. It assesses the key characteristics of the filling stations
located in proximity to the proposed development site in order to determine their implications for the
proposed development. These characteristics include the estimated volumes of fuel sales that they
supply and convenience facilities that they provide.

Section 4 examines the demand side of the proposed development. This provides a market a market
delineation and demand assessment for the proposed filling station. Specifically, it analyses the
location of the proposed development site and traffic flows in the area where it is located. It also
describes the geographic extent of the possible demand for fuel and other products and facilities that
the proposed filling station is intended to offer.

Section 5 investigates the possible impacts of the proposed development and assesses their
intensity. Specifically, the section examines the possible impacts on impacts on existing filling stations
and on the area surrounding the proposed development site.

Section 6 concludes the report.




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                                                                        Urban-Econ Development Economists
2. DESCRIPTION OF THE CATCHMENT AREA

This section provides a description of the study area in order to determine the potential market for the
products and services that the proposed development is intended to provide. Specifically, the section
identifies the catchment area and describes its characteristics. It is structured as follows:


    Identification of the catchment area,
    Demographic profile of the catchment area,
    Economic profile of the assessment of the assessment area,
    Types of transport used by people living in the area,
    Travel patterns within the study area and between the area and other places,
    Traffic flows in the assessment area, including the Main R34, and
    Future developments in the area.

2.1 IDENTIFYING THE CATCHMENT AREA

2.1.1 Places in the Immediate Vicinity of the Proposed Development Site


The proposed development site, which, as stated above, falls within Ward 24 of the uMhlathuze Local
Municipality, is situated in an area consisting mainly of rural settlements and commercial farms. This
municipality is one of the six local municipalities situated within the uThungulu District. Being the third
largest economy in KwaZulu-Natal, Umhlathuze comprises urban settlements, rural settlements, rural
areas, commercial farms and nature reserves.

Table 1 below presents the townships and rural settlements located in the immediate vicinity of the
proposed development Site. It also provides a list of the farms that are situated in these areas.


Table 1: Places situated in Close Proximity to the Proposed Development
    Places Situated in Proximity to the Proposed Development Site
    Townships and Rural                Farms                             Settlement/Farm Location in
    Settlements                                                          relation to the Proposed Site
    Mtengu                             Lot 5333
    KwaNobonya                         Not provided                      South-west
    Sgisi                              Staeland
    Enyembe                            Hume 16666
    Matshana                           Lot 109 of Umhlathuze             South
    Dondolo/Ngwezelana                 Enseleni                          South-east
    Bhenjane                           Canewdon Lodge                    East
    Ntabinamasi                        Not provided                      North-east
Source: uMhlathuze Local Municipality


The following places are also located within the vicinity of the study area:


 The Heatonville commercial farming area and the Makhwela settlement, which are both situated
  north of the proposed development site,


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                                                                          Urban-Econ Development Economists
 TICOR SA, Qalakabusha Prison that is a regional prison and a new industrial estate on the south-
  west of the TICOR site,
 Macekane and Sihuzu settlements, which are situated north-east of the site.

The development of TICOR SA, Qalakabusha Prison and the new industrial estate has and will
contribute substantially on the traffic volumes that flow past the site.

2.1.2 Places Located Further Away From the Proposed Development Site


The broader area consists of Empangeni Central, which is located about 6.2 kilometres south-east of
the site. Empangeni is a significant economic centre within the uThungulu District. It is also one of the
most significant economic centres at the KwaZulu-Natal provincial level. Due to a variety of services
available in the town of Empangeni, it attracts many people from various parts of the district and from
other districts. In view of the high number of vehicles travelling to, within, and from the centre on a
daily basis, there is a variety of filling stations in the area. Many of them are located along the R34,
which is the main road in the town centre. They differ in size since some offer a variety of services to
their customers. These include facilities such as ATMs, fast-food outlets and parking facilities.


Since these filling stations are situated more than 6 kilometres away from the proposed development
site, they are likely to be only partially affected by or affect the proposed development.

2.1.3 Places Situated More than 10 Kilometres from the Proposed Development Site


There are other filling stations in the town of Empangeni, but due to their distance of more than 10
kilometres from the proposed development site, they are neither likely to affect nor be affected by the
proposed development.

2.1.4 The Catchment Area


Based on the information provided in the above sub-sections, it is concluded that the catchment area
consists of the following municipal wards:


   Wards 24 to 28 of uMhlathuze Local Municipality,
   Wards 7 and 8 of Ntambanana Local Municipality, and
   Ward 13 of uMlalazi Local Municipality.

2.2 SOCIO-ECONOMIC PROFILE OF THE CATCHMENT AREA

The demand and impact of the proposed development is likely to be highly influenced by its spatial
location with regard to the socio-economic profile of sub-places in proximity. These include residential
dwellings, farming areas, competing businesses and traffic-generating support businesses, which
include motor vehicle-related businesses such as auto-repairs shops.

As already stated, the proposed development site is situated more than 6 kilometres away from the
town of Empangeni. Since it is a major commercial/retail and service centre in uThungulu, it attracts
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                                                                        Urban-Econ Development Economists
shoppers, customers and business people from various parts of the district. Many of them use either
private vehicles or public transport to travel to the town. In view of the relatively large number of
vehicles going into, coming out of or passing through Empangeni, there are many filling stations in the
town.
Figure 5 below shows the catchment area in relation to relevant traffic generating and motor vehicle
related developments. The latter include filling stations located within the study area.




Figure 6: Filling Stations Located along the Main R34 and Close-by

                                                               Figure 6 illustrates the filing stations that
                                                               are located along the Main R34. With the
                                                               exception of the Engen Fuel Stop, which
                                                               is not open to the public, all of them are
                                                               in Empangeni.




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                                                                         Urban-Econ Development Economists
Figure 7: Areas that are not Currently Directly Serviced by any Filling Station


                                                                                      Figure 7 illustrates areas
                                                                                      that   are        in        close
                                                                                      proximity         to          the
                                                                                      proposed development
                                                                                      site, which are currently
                                                                                      not    serviced        by    any
                                                                                      filling stations. They
                                                                                      include          Mtengu,
                                                                                      KwaNoboya,      Sigisi,
                                                                                      Heatinville, Enyembe,
                                                                                      Matshana, Bhenjane and
                                                                                      Ntabinamasi. Their exact
                                                                                      locations are indicated in
                                                                                      Figure 3 above.




Source: Google Earth

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2.2.1: Demographic Profile of the Catchment Area

    Population Profile

With a total population of about 85 719 people, the identified catchment area is a densely populated
area. Ward 24, which is home to the proposed development site, has the largest number of people,
making up 15.3% of the population of the area. The relatively high density within the catchment area
indicates that a high number of people who are likely to be affected by the proposed development. It
also provides an indication of the potentially high number of people that fall within the target market.
Table 2 below presents the population figures estimated for each of the identified municipal wards
that make up the catchment area.

Table 2: Population Estimates for the Catchment Area
                                                                         Ntambanana         UMlalazi       Total
       Total                     Umhlathuze Wards                           Wards           Wards           (All
    Population      Ward       Ward    Ward     Ward             Ward   Ward    Ward         Ward        Identified
     Estimate        24         25       26       27              28     7        8           13          Wards)
      (2007)
                  13089   11933      12377     11261    8733    9737              12505         6084              85719
Source: Census 2001, Community Survey 2007 and Urban-Econ Estimates




2
 In view of the unavailability of sub-place level data for the sub-places identified in Section 1 above, ward-level
data were used in this study to calculate the figures and percentages shown in this section.
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                                                                               Urban-Econ Development Economists
   Age Profile


By assessing the age profiles of the catchment area, it is possible to estimate the percentage of
people who fall within the schooling age and working age categories. This is also makes it possible to
estimate the proportion of individuals who fall into the soon-to-be-working age category. The age
profile of the catchment area is important to this study because it gives an indication of the number
and of people commuting daily within the catchment area and between this area and places that fall
outside the area.

As illustrated in Figure 8 below, working age individuals make up approximately 63% of the number of
people living in of Ward 24 of uMhlathuze Local Municipality. Similarly, in each of the wards located in
close proximity to this ward, working age individuals make up at more than 56% the population. These
findings indicate that there are a high number of cars or taxis which travel daily to places of
employment along roads in the study area, including the R34.




Sources: Census 2001, Community Survey 2007 and Urban-Econ Estimations

    2.2.2   Economic Profile

   Employment Profile


Empangeni Central is an employment and facilities node for the rural and peri-urban areas located to
its west, north west and south west. Figure 9 below illustrates the desire lines from Empangeni to
various parts of KwaZulu-Natal and to other provinces. These lines indicate movement patterns

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                                                                       Urban-Econ Development Economists
between the former and each of the places. Their numerousness indicates that Empangeni is a
central node for the uThungulu District. Those on the north-western side of Empangeni indicate
regular movement of people along the R34 between Empangeni and areas such as


   Bukhanana in Ntambanana,
   Nkwaleni (the R34/R66 junction) in Mthojaneni,
   Melmoth in Zululand, and
   The western and north-western districts of KwaZulu-Natal.


The above information indicates that there is considerable employment and facilities-related
commuting from the wards situated in near the proposed development site towards Empangeni. This
is expected since Empangeni is the closest service node for most of the townships and rural
hinterland in the uThungulu.

Figure 9: Desire Lines from Empangeni to other parts of uThungululu and to other Areas




Source: uThungulu District Municipality

Figure 10 below illustrates the desire lines from Bukhanana situated north of the proposed
development site, and Melmoth, which is situated north-west of the site. The former is illustrated on
the left hand side of this figure, while the latter is shown on its right hand side. These desire lines
illustrate movement patters between each of these two places and other places, including
Empangeni. It is worth mentioning that the R34 connects these places with Empangeni.

The importance of the R34 as a regional transport corridor and collector roads is clearly highlighted by
these diagrammed. It means that that the future growth of traffic along the roads will only increase
with growth in the population and in the economy.


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                                                                       Urban-Econ Development Economists
Figure 11 below illustrates the percentage of economically-active people in each of the wards that
form the catchment area. As stated above, Empangeni is a major commercial node in uThungulu and
offers employment opportunities to a relatively larger number of labour force participants. As a result,
Figure 11 suggests that there are economically active people who travel on a regular basis from
Wards 24 to 28 of uMhlathuze, Wards 7 and 8 of Ntambanana, and Ward 13 of uMlalazi to
Empangeni and vice-versa.




Sources: Quantec Research and Urban-Econ Estimations, 2010
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                                                                       Urban-Econ Development Economists
        Income Profile


The income estimations done for the catchment area show that about than 64.7% of households in
Ntambanana Wards 7 and 8 earn a salary of between R1 and R400 per month. The percentage
calculated for the uMlalazi Ward 13 households who fall within this category is 68.7%. Meanwhile, the
average percentage of households in the two Ntambanana wards that earn between R401 and R800
is 1.7%. These percentages suggest that a considerable number of people living in these wards
commute to work on a daily basis. The fact that the distance between each of these wards and
Empangeni is in excess of 7 kilometres suggests that some of the commuters from these wards who
work in Empangeni use public transport to travel to work.


As illustrated in Figure 12, a significant number of households in uMhlathuze Wards 24 to 28 do not
earn an income. On average, about 46.7% of them households fall within the ‘No Income’ category.
One plausible explanation of this situation is that since these wards are predominantly rural, many
households in these areas depend on subsistence agriculture for their livelihoods.

However, it is important to mention that a considerable number of households in these wards do earn
incomes. On average, while households in these wards that earn a monthly income of between R1
and R400 account for 20.5% of the total number of households that earn an income in these wards,
those that earn between R401 and R800 constitute 5.7% of the same total. Those that fall into the
R801-R1600, R1 601–R3200 and R3201–R6000 income categories make up 13.4%, 7.6% and 6.1%
respectively. In summary, this information indicates that the majority of households in these wards –
53% to be precise - earn monthly incomes. What this implies is that most of the economically active
members of these households travel to work daily. Those who work in places like Empangeni and
Richard’s Bay most likely use the R34 on their daily commute between work and home.


2.2.3 Current Means of Transport

Apart from walking on foot, , the main means of transport to work or school in the eight areas falling
into the catchment area are:


        Bus,
        Minibus taxis,
        Private cars as passengers, and
        Motorcycles.


Figure 12 below highlights the prevalence of public transport in Wards 24 to 28 of uMhlathuze, Wards
7 and 8 of Ntambanana and Ward 13 of uMlalazi. As indicated in the figure, the most commonly used
                 3
mode of transport is private transport. Busses are the least used means of transport in these areas.




3
    Walking to work or school is excluded from this analysis because it is considered irrelevant to this stuy.
                                                           16


                                                                                   Urban-Econ Development Economists
Figure 12: Prevalence of public transport in Wards 24 to 28 of uMhlathuze, Wards 7 and 8 of
             Ntambanana and Ward 13 of uMlalazi.




Sources: Quantec Research and Urban-Econ Estimates, 2010


2.3 SYNOPSIS

The proposed development site is situated within Ward 24 of the uMhlathuze Local Municipality. It is
situated in an area consisting mainly of rural settlements and commercial farms. These areas make
up the primary market in this study. The specific areas that are considered in this study as the primary
market for the development in this study are Wards 24 to 28 of uMhlathuze, Wards 7 and 8 of
Ntambanana, and Ward 13 of uMlalazi.

The Empangeni town, which is situated about 6.2 kilometres south-east of the site, forms the
secondary market area. Due to a variety of services available in this, it attracts many people from
various parts of the district and from other districts. In view of the significant number of vehicles
travelling to, within, and from the centre on a daily basis, there is a variety of filling stations in the
area. Many of them are located along the R34 or nearby access roads. The proposed filling station is
likely to have a small impact on these filling stations since all of them are located more than 7
kilometres away from the proposed development site.

There are other filling stations in the town of Empangeni. However, since they are located more than
10 kilometres from the proposed development site, they are not likely to be affected by the proposed
development.

The residents of the eight wards mentioned above use various means of transport to travel to work or
to school. They range from private vehicles to taxis and busses. The existence of number of vehicles
passing the proposed development site are likely to have implications for the proposed development
since some of them might start filling up at the proposed filling station.

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                                                                             Urban-Econ Development Economists
3. MARKET SUPPLY ANALYSIS
This section examines the findings of the market supply assessment undertaken within the study
area. Specifically, it discusses the key characteristics of the filling stations located in proximity to the
proposed development site. A better understanding of such characteristics will help determine their
likely implications for the proposed development and vice versa. This discussion covers the following
issues:

   Location of each existing filling station within the study area and its description in relation to the
    proposed development site,
   Estimated fuel volumes sold by existing filling stations,
   Convenience facilities provided by existing filling stations, and
   Implications of the existing filling stations for the proposed development.



3.1 LOCATION OF EXISTING FILLING STATIONS

3.1.1 Filling Stations in Close Proximity to the Proposed Development Site


There are currently no other competing filling stations within a radius of 7 km from the proposed
development site. A Engen Fuel Stop is located about 5 km away from the proposed development site
and is a dedicated facility aimed at the industrial vehicles of TICOR. Other filling stations are located
more than 7 kilometres away from the site inside the urban areas of Empangeni.

This means that there are no filling stations considered in this study that are expected to have a
significant impact on the proposed development and vice versa. Below is a list of the filling stations
that fall in the secondary market area of Empangeni more than 7 km away from the site:

   John Ross Service Station
   Assagai Motors
   Rex Henderson Road Excel
   Ritchie Landrover
   Olympic Service Station
   Shell Fuel
   Ford Richie Auto
   Jackson's Convenience Centre.

3.1.2 Filling Stations Located within the Secondary Market


Figure 13 below illustrates the location of existing filling stations located within the study area in
relation to the proposed development site. As shown in this diagram, the majority of them are located
in the town Empangeni. In fact, the Engen Fuel Stop associated with TICOR is the only one that is
located outside the town.



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                                                                          Urban-Econ Development Economists
Figure 13: Location of Existing Filling Stations in relation to the Proposed Development Site




A zoomed-in image of the locations of the existing filling stations within Empangeni is given as Figure
13 below. Due to their distance from the proposed development site, and the fact that most of them
are located along the R34, the following filling stations fall within the secondary market:

   John Ross Service Station
   Assagai Motors
   Rex Henderson Road Excel
   Ritchie Landrover
   Olympic Service Station
   Shell Fuel (6)
   Ford Richie Auto
   Jackson's Convenience Centre
   Ngwenya Service Station

The two filling stations that are not located along the R34, namely Ford Ritchie Auto and Shell Fuel in
Empangeni Central, are classified under the Secondary Market category because they are nearer to
the proposed development site than some of the filling stations that are situated along the same road.

The dotted ellipse in Figure 13 below highlights the locations of these filling stations within the
secondary market.
                                                    19


                                                                         Urban-Econ Development Economists
Figure 14: Locations of the Existing Filling Stations within the Secondary Market




Source: Google Earth, 2010


3.1.3 Filling Stations within the Tertiary Market


The filling stations that are located along the Grantham and John Ross Highways fall within the
tertiary market. This is because they are located further away from the proposed development site
than those that fall within the secondary market. Furthermore, since their primary markets are
different from that of the proposed filling station, the development is not likely to affect or be affected
by them. Figure 15 below provides an illustration of the filling stations that are located within the
tertiary market. They are as follows:


   Shell – Hancock Avenue (name of filling station not supplied)
   Pace Motors
   East Zulu Motors




                                                    20


                                                                         Urban-Econ Development Economists
Figure 15: Filling Stations located within the Tertiary Market




Source: Google Earth, 2010


The details of each of the existing filling stations within the secondary area in terms of name,
operator, address and distance from the proposed development site are provided in Table 3 below.
The table also indicates whether these filling stations have a shared traffic stream with the proposed
development.

Table 3: Existing Filling Stations within the Secondary Area and their Distances from the Development Site
                         Existing Filling Stations within the Secondary Market
                                                                                  Distance        Shared
 No.   Filling Station Name         Fuel Brand      Address                       from Site       Traffic
                                                    Corner Tanner & John
 1     John Ross Service Station    Caltex          Ross Highway                  9.9 km               Yes
 2     Assagai Motors               Shell           104 Rex Henderson Road        8.2 km               Yes
       Rex Henderson Road
 3     Excel                        Excel           Rex Henderson Road            8.5 km               Yes
 4     Ritchie Landrover            Engen           68 Rex Henderson Road         7.4 km               Yes
 5     Olympic Service Station      Caltex          50 Rex Henderson              7.1 km               Yes
 6     Shell Fuel                   Shell           Maxwell Street                7.5 km               Yes
 7     Ford Richie Auto             Engen           26 Union Street               7.7 km               Yes
       Jackson's Convenience
 8     Centre                       Engen           Rex Henderson Road 3880       9.3 km               Yes



                                                       21


                                                                             Urban-Econ Development Economists
3.2 VOLUMES SOLD BY EXISTING FILLING STATIONS

Table 4 below indicates the approximate minimum and maximum average volumes sold per month by
the filling stations that are located within the secondary market. These volumes are based on data
provided through a survey on existing filling stations and on estimated volumes based on calculations
by Urban-Econ. The stars next to the estimated fuel volumes in the table indicate that these figures
are inferred from the discussions held with the station management and from the management of the
nearest filling stations with the characteristics.


As shown in the table, the two filling stations that are closer to the proposed filling station than the
others that are situated within the secondary market, namely, Olympic Service Station (7.1 km) and
Ritchie Landrover (7.4 km) provide between 348 500 and 410 000 litres of fuel every month.

Table 4: Average Volumes of Fuel Sales (Litres Per Month) for Existing Filling Stations 2010
                                                             Average Volume Sales per Month (Litres)
 No        Filling Station Name       Operator       Approximate Minimum               Approximate Maximum
  1    John Ross Service Station      Caltex                 450 000                            650 000
  2    Assagai Motors                 Shell                  550 000                            650 000
  3    Rex Henderson Road Excel       Excel                  309 375*                           365 625*
  4    Ritchie Landrover              Engen                  170 000                            200 000
  5    Olympic Service Station        Caltex                 178 500*                           210 000*
  6    Shell Fuel                     Shell                  130 900*                           152 727*
  7    Ford Richie Auto               Engen                  240 000                            280 000
       Jackson's Convenience
  8    Centre                         Engen                  224 000                            420 000
                   TOTAL                                  1 634 000                            2 200 000
Source: Survey on Existing Filling Stations in Empangeni, Urban-Econ, May-June 2010



3.3 FACILITIES PROVIDED BY EXISTING FILLING STATIONS

Table 5 below lists the facilities and services provided by the existing filling stations within the
secondary market.

Table 5: Facilities provided by existing filling stations: Secondary Market
                                            Filling Stations within the Secondary Market
                  John     Assagai      Excel Rex       Ritchie          Olympic       Shell       Ford    Jackson's
   Name           Ross     Motors       Henderson      Landrover         Service       Fuel       Richie   Convenien
                 Service     (2)          Road            (4)            Station                   Auto    ce Centre
                 Station                   (3)                              (5)         (6)         (7)       (8)
                   (1)
Operator        Caltex     Shell       Excel           Engen         Caltex        Shell         Engen     Engen
                                     Facilities offered by each Filling Station
Number of       24         32          18              8             8             6             11        30
Nozzles
Convenience                                                                                                Yes
Retail Centre   Yes        Yes         Yes             Yes           Yes           No            No
Fast Food
Outlet          No         Yes         Yes             Yes           Yes           No             No       Yes

                                                       22


                                                                               Urban-Econ Development Economists
                                           Filling Stations within the Secondary Market
                  John     Assagai    Excel Rex        Ritchie       Olympic       Shell     Ford     Jackson's
    Name          Ross     Motors     Henderson       Landrover      Service       Fuel     Richie    Convenien
                 Service     (2)        Road             (4)         Station                 Auto     ce Centre
                 Station                 (3)                            (5)         (6)       (7)        (8)
                   (1)
Operator        Caltex     Shell      Excel           Engen         Caltex        Shell    Engen     Engen
In close
proximity to
Convenience
Retail Centre   Yes        Yes        Yes             Yes           Yes           No       Yes       Yes
Car Wash
Facility        Yes        No          No             No            Yes           No       Yes       No
Located Near
Car Service
Station         Yes        Yes        No              No            No            No       No        Yes
Rest Rooms
                Yes        Yes                        Yes           Yes           No       Yes       Yes

ATM             Yes        Yes        Yes             Yes           Yes           No       No        Yes
Truck filling
facility        No         No         No              No            No            No       No        No
Car Spares
Store           No         No         No              Yes           No            No       Yes       No
Source: Survey on Existing Filling Stations in Empangeni, Urban-Econ, May-June 2010



3.4 IMPLICATIONS FOR THE PROPOSED DEVELOPMENT

The Olympic Service Station and Ritchie Landrover, which are located approximately 7.1 and 7.4
kilometres respectively from the proposed development site, may have implications on the target
market of the proposed development. This is because they are more likely to share the traffic stream
with the proposed development than the rest. However, any impacts that the proposed development
might have on them are not expected to be highly significant. This is because all of them are located
more than 7 kilometres away from the proposed development site.



3.5 SYNOPSIS

There are currently seven filling stations within the secondary market area that are more than 7 km
from the site. Other stations are situated more than 10 kilometres from the site and are not included in
this assessment. As a result, none of them are likely to have significant implications for the proposed
development. The development is also not likely to have significant implications for them.




                                                      23


                                                                             Urban-Econ Development Economists
4. MARKET DEMAND ANALYSIS
This section provides the market demand assessment for the proposed development in order to
determine the feasibility of the development.

4.1 MARKET DEMAND FOR FUEL

As noted above, the site for the proposed development is located along the R34 between Empangeni
and the R34/R66 junction in Nkwaleni, uMlalazi Local Municipality. This road serves general urban
traffic originating from the town of Empangeni south east of the proposed development site and from
neighbouring areas. It also serves traffic originating from various townships, commercial farming
areas and rural areas:


     Western part of uMhlathuze,
     Southern and eastern parts of Ntambanana, which include Bukhanana and Heatonville,
     Northern uMlalazi, and
     Some parts of Mthojaneni.

Since the proposed development site is located close to various residential and farming areas, there
is a good likelihood that the market for the proposed development will consist of a residential market.
It is expected to include of commuter passenger vehicle traffic from the areas listed in sub-Section 4.1
above. It is also expected to comprise some vehicle and motorcycle traffic originating from the
Empangeni area, which is predominantly urban.

4.1.1 Vehicles Passing the Proposed Development Site over a 24-hour Period, 2010


Table 6 below shows a profile of the estimated number and types of vehicles passing the proposed
development site over 24-hour period in 2010 along the R34.


Table 6: Profile of Vehicles passing the site over a 24-hour period (2010)

             Traffic Volumes, Average Annual Daily Traffic Passing the Site (AADT) 2010
    Transport Means                       %                   Low Traffic Volumes         High Traffic Volumes
    By Motorcycle                                     6.5                          652                          978
    Light Vehicle                                   81.9                         8191                        12287
    By Minibus/Taxi                                   7.2                          722                         1083
    By Bus                                            4.3                          435                          652
         4
 Total : Min and Max AADT                   100.0                  10000                                     15000
Source: uThungululu District Municipality and Urban-Econ Estimations, 2010



4
 According to the uThungulu Integrated Transport Plan (2005), the number of vehicles passing the proposed
development site ranged between and 1 501 and 5 000. Urban-Econ’s 2010 estimations are such that on average,
between 10 000 and 15 000 vehicles pass the site daily. These estimates take into account traffic that originates from
places located west of Empangeni, as well as the growth in the market and the impacts that the growth of TICOR, the
prison and the new industrial area have on the traffic flows.
                                                         24


                                                                                 Urban-Econ Development Economists
4.2. EFFECTIVE DEMAND

The total number of vehicles passing the site over a 24-hour period, disaggregated into types of
vehicles as indicated by Table 6, are utilised for the purposes of calculating effective demand. This
sub-section discusses existing and potential future effective demand for fuel. The filling station
demand calculation method is derived from the amount of fuel sold to the transient market. This is
illustrated by the following function:

Dfs = F(Ltt)
Dfs = demand for filling station
Ltt = litres of fuel sold to the transient market


In order to determine volumes of fuel demanded by the transient market, the fuel volumes that can be
attracted by the new filling station are estimated. This is done by the following functions:

Dfv = f(v ; s ; af ; d)
Dfv = demand for fuel volumes
v = vehicles (24 hour)
s = interception rate (catchment) %
af = average fill
d = days


The tables below indicate the values for the variables used in Section 4.1.1 for calculating effective
demand.

The estimated average fill per vehicle type is indicated in Table 7 below.

Table 8: Average Fill per Vehicle Type
                    Vehicle Type                              Average Fill Per Vehicle Type
 Motorcycle                                                                  80
 Light Vehicle                                                               40
 Minibus/Taxi                                                                45
 Bus                                                                         80


As indicated by the Table 9 below, this study considers the total number of effective days in a month
to be 26.

Table 9: Active Days per Month
          Day             Number of days            Weighted Average value of           Effective Days
                            per month               Weekend Days to Weekdays
       Saturday                 4                             0.65                             2.6
       Sunday                      4                          0.35                             1.4
         Week                    22                             1                              22
                           Total Effective Days per Month                                      26


                                                      25


                                                                         Urban-Econ Development Economists
Six scenarios have been modelled for estimating existing effective demand based of two interception
rates, viz., Low Interception Rate and High Interception Rate. They are shown in the table below.


Table 10: Interception Rates Applied to the Catchment Area, 2010 and 2015

                              Interception Rates Applied to the Catchment Area, 2010 and 2015 (%)
   Interception Rate       Traffic             By              By Light             By
                           Volumes          Motorcycle         Vehicle         Minibus/Taxi      By Bus
                           Low                           2               2.5             2.5              1
 Low Interception Rate
                           Medium                     2.5                3.5             3.5              2
                           High                          3                5                5              3
                           Low                           2               2.5             2.5              1
 High Interception Rate
                           Medium                     2.5                3.5             3.5              2
                           High                          3                5                5              3



4.2.1 Existing Potential Effective Demand: 2010


The existing potential effective demand for 2010 has been calculated, utilising values of variables as
discussed in Section 4.2 above, for the six scenarios listed in Table 10 above as indicated by the
following tables.

   Scenario 1: Low Traffic, Low Interception, 2010


Based on the low interception rate (catchment) scenario, the existing potential effective demand for
fuel is 193 282.2 litres per month, as indicated by the table below.


Table 11: Existing effective Demand based on Low Interception (Catchment) Rate, 2010

                                               By                                   By
         Low interception Rate              Motorcycle       Light Vehicle     Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes               652.0           8 191.1            722.2          434.7
 Interception Rate (Catchment)                        2.0                2.5             2.5            1.0
 Catchment Traffic                                   13.0              204.8            18.1            4.3
 Average Fill (Litres)                               10.0               30.0            45.0          80.0
 Active days                                         26.0               26.0            26.0          26.0
 Total Demand (Litres per Month)                 3 390.6        159 726.5          21 123.3        9 041.9
 Total Potential Fuel Sales Litres per
 Month                                                                 193 282.2



   Scenario 2: Low Traffic, Medium Inception, 2010


Based on the medium interception rate (catchment) scenario, the existing potential effective demand
for fuel is 275 511.6 litres/month, as indicated by the table below.



                                                    26


                                                                           Urban-Econ Development Economists
Table 12: Existing effective Demand based on Medium Interception (Catchment) Rate, 2010
                                              By                                   By
       Medium interception Rate            Motorcycle      Light Vehicle      Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes              652.0             8 191.1            722.2        434.7
 Interception Rate (Catchment)                       2.5                3.5              3.5           2.0
 Catchment Traffic                                  16.3             286.7              25.3           8.7
 Average Fill (Litres)                              10.0               30.0             45.0         80.0
 Active days                                        26.0               26.0             26.0         26.0
 Total Demand (Litres per Month)                 4 238.2          223 617.1         29 572.6     18 083.7
 Total Potential Fuel Sales Litres Per
 Month                                                                  275 110.6



   Scenario 3: Low Traffic, High Inception, 2010


Based on the high interception rate (catchment) scenario, the existing potential effective demand for
fuel is 393 910.9 litres/month, as indicated by Table 13 below.


Table 13: Existing effective Demand based on High Interception (Catchment) Rate, 2010
                                              By                                   By
         High Interception Rate            Motorcycle      Light Vehicle      Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes              652.0             8 191.1            722.2        434.7
 Interception Rate (Catchment)                       3.0                5.0              5.0           3.0
 Catchment Traffic                                  19.6             409.6              36.1         13.0
 Average Fill (Litres)                              10.0               30.0             45.0         80.0
 Active days                                        26.0               26.0             26.0         26.0
 Total Demand (Litres per Month)                 5 085.8          319 453.0         42 246.6     27 125.6
 Total Potential Fuel Sales Litres Per
 Month)                                                               393 910.9



   Scenario 4: High Traffic, Low Inception, 2010


As indicated in the table below, this particular scenario yields a potential effective demand for fuel of
289 923.3 litres per month.

Table 14: Existing effective Demand based on Low Interception (Catchment) Rate, 2010
                                              By                                   By
           Low Inception Rate              Motorcycle      Light Vehicle      Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes              978.0        12 286.7              1 083.2        652.1
 Interception Rate (Catchment)                      2.0             2.5                  2.5          1.0
 Catchment Traffic                                 19.6           307.2                 27.1          6.5
 Average Fill (Litres)                             10.0            30.0                 45.0         80.0
 Active days                                       26.0            26.0                 26.0         26.0
 Total Demand (Litres per Month)                5 085.8       239 589.7             31 684.9     13 562.8
                                                  27


                                                                          Urban-Econ Development Economists
                                               By                                By
          Low Inception Rate                Motorcycle     Light Vehicle    Minibus/Taxi       By Bus
 Total Potential Fuel Sales Litres per
 Month)                                                             289 923.3


   Scenario 5: High Traffic, Medium Inception, 2010


The high traffic, medium interception rate scenario yields a potential effective demand for fuel of litres
per month, as indicated by Table 15 below.


Table 15: Existing effective Demand based on Medium Interception (Catchment) Rate, 2010
                                               By                                By
       Medium Interception Rate             Motorcycle     Light Vehicle    Minibus/Taxi       By Bus
 24-hour Low Passing Traffic Volumes               978.0        12 286.7          1 083.2          652.1
 Interception Rate (Catchment)                       2.5              3.5              3.5            2.0
 Catchment Traffic                                  24.5            430.0            37.9           13.0
 Average Fill (Litres)                              10.0             30.0            45.0           80.0
 Active days                                        26.0             26.0            26.0           26.0
 Total Demand (Litres per Month)                 6 357.3       335 425.6         44 358.9       27 125.6
 Total Potential Fuel Sales Litres Per
 Month)                                                              413 267.4



   Scenario 6: High Traffic, High Inception, 2010


Based on the high interception rate (catchment) scenario, the existing potential effective demand for
fuel is 590 866.4 litres per month. This information is provided in tabular form below.

Table 16: Existing effective Demand based on High Interception (Catchment) Rate, 2010
                                               By                                By
         High Interception Rate             Motorcycle     Light Vehicle    Minibus/Taxi       By Bus
 24-hour Low Passing Traffic Volumes               978.0        12 286.7          1 083.2          652.1
 Interception Rate (Catchment)                       3.0              5.0              5.0            3.0
 Catchment Traffic                                  29.3            614.3            54.2           19.6
 Average Fill (Litres)                              10.0             30.0            45.0           80.0
 Active days                                        26.0             26.0            26.0           26.0
 Total Demand (Litres per Month)                 7 628.8       479 179.5         63 369.9       40 688.3
 Total Potential Fuel Sales Litres Per
 Month)                                                              590 866.4



4.2.2 FUTURE POTENTIAL EFFECTIVE DEMAND: 2015


Future potential effective demand for 2010 - 2015 has also been calculated. The traffic growth rate
used in these calculations, which is 3.5%, is in line with realistic economic growth in the area. As

                                                   28


                                                                        Urban-Econ Development Economists
discussed in Section 4.2 above, the effective demand has been calculated for two scenarios, viz. low
interception and high interception (catchment) rates.

   Scenario 1: Low Traffic, Low Interception, 2015


As indicated by the table below, the low interception rate (catchment) scenario yields a future
potential effective demand for fuel in 2015 is 229 558.6 litres per month.


Table 17: Future Potential Effective Demand based on Low Interception (Catchment) Rate, 2015
                                              By                                By
         Low Interception Rate             Motorcycle      Light Vehicle   Minibus/Taxi       By Bus
 24-hour Low Passing Traffic Volumes              774.4          9 728.5           857.7          516.3
 Interception Rate (Catchment)                       2.0             2.5              2.5            1.0
 Catchment Traffic                                  15.5           243.2             21.4            5.2
 Average Fill (Litres)                              10.0            30.0             45.0          80.0
 Active days                                        26.0            26.0             26.0          26.0
 Total Demand (Litres per Month)                 4 026.9       189 705.0        25 087.8       10 738.9
 Total Potential Fuel Sales Litres per
 Month                                                              229 558.6



   Scenario 2: Low Traffic, Medium Inception, 2015


As indicated by the table below, using the low traffic, medium inception rate scenario yields a potential
effective demand for fuel of 327 221.3 litres per month.


Table 18: Future Potential Effective Demand based on Medium Interception (Catchment) Rate, 2015
                                              By                                By
       Medium Interception Rate            Motorcycle      Light Vehicle   Minibus/Taxi       By Bus
 24-hour Low Passing Traffic Volumes              774.4          9 728.5           857.7          516.3
 Interception Rate (Catchment)                       2.5             3.5              3.5            2.0
 Catchment Traffic                                  19.4           340.5             30.0          10.3
 Average Fill (Litres)                              10.0            30.0             45.0          80.0
 Active days                                        26.0            26.0             26.0          26.0
 Total Demand (Litres per Month)                 5 033.6       265 586.9        35 123.0       21 477.8
 Total Potential Fuel Sales Litres per
 Month                                                              327 221.3



   Scenario 3: Low Traffic, High Inception, 2015


As shown in Table 19 below, applying the low traffic, high inception rate scenario yields a potential
effective demand for fuel of 467 842.6 litres per month in 2015.




                                                   29


                                                                        Urban-Econ Development Economists
Table 19: Future Potential Effective Demand based on High Interception (Catchment) Rate, 2015
                                             By                                By
         High Interception Rate           Motorcycle      Light Vehicle   Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes             774.4          9 728.5          857.7          516.3
 Interception Rate (Catchment)                      3.0             5.0             5.0            3.0
 Catchment Traffic                                23.2           486.4             42.9          15.5
 Average Fill (Litres)                            10.0             30.0            45.0          80.0
 Active days                                      26.0             26.0            26.0          26.0
 Total Demand (Litres per Month)               6 040.4       379 409.9        50 175.7       32 216.6
 Total Potential Fuel Sales Litres per
 Month                                                            467 842.6



   Scenario 4: High Traffic, Low Inception, 2015
Based on the low interception rate (catchment) scenario, the estimated future potential effective
demand for fuel in 2015 is 344 337.9 litres per month, as indicated by Table 20.


Table 20: Future Potential Effective Demand based on Low Interception (Catchment) Rate, 2015
                                             By                                By
         Low Interception Rate            Motorcycle      Light Vehicle   Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes           1 161.6        14 592.7         1 286.6          774.4
 Interception Rate (Catchment)                     2.0             2.5             2.5            1.0
 Catchment Traffic                                23.2           364.8            32.2            7.7
 Average Fill (Litres)                            10.0            30.0            45.0           80.0
 Active days                                      26.0            26.0            26.0           26.0
 Total Demand (Litres per Month)               6 040.4       284 557.4        37 631.8       16 108.3
 Total Potential Fuel Sales Litres per
 Month                                                            344 337.9


   Scenario 5: High Traffic, Medium Inception, 2015
Based on the medium interception rate (catchment) scenario, the estimated future potential effective
demand for fuel in 2015 is 490 832.0 litres per month, as indicated by Table 21 below.


Table 21: Future Potential Effective Demand based on Medium Interception (Catchment) Rate, 2015
                                             By                                By
       Medium Interception Rate           Motorcycle      Light Vehicle   Minibus/Taxi      By Bus
 24-hour Low Passing Traffic Volumes           1 161.6        14 592.7         1 286.6          774.4
 Interception Rate (Catchment)                     2.5              3.5             3.5            2.0
 Catchment Traffic                                29.0           510.7            45.0           15.5
 Average Fill (Litres)                            10.0            30.0            45.0           80.0
 Active days                                      26.0            26.0            26.0           26.0
 Total Demand (Litres per Month)               7 550.5       398 380.4        52 684.5       32 216.6
 Total Potential Fuel Sales Litres per
 Month                                                            490 832.0



                                                 30


                                                                      Urban-Econ Development Economists
      Scenario 6: High Traffic, High Inception, 2015
Based on the high interception rate (catchment) scenario, the estimated future potential effective
demand for fuel will be 701 763.9 per month in 2015, as shown in the table below.


Table 22: Future Potential Effective Demand based on Medium Interception (Catchment) Rate, 2015
                                               By                                 By
    Medium Interception Rate                   Motorcycle        Light Vehicle    Minibus/Taxi            By Bus
    24-hour Low Passing Traffic Volumes        1 161.6           14 592.7         1 286.6                 774.4
    Interception Rate (Catchment)              3.0               5.0              5.0                     3.0
    Catchment Traffic                          34.8              729.6            64.3                    23.2
    Average Fill (Litres)                      10.0              30.0             45.0                    80.0
    Active days                                26.0              26.0             26.0                    26.0
    Total Demand (Litres per Month)            9 060.6           569 114.9        75 263.5                48 325.0
    Total Potential Fuel Sales Litres per
    Month                                                                   701 763.9


4.3 SYNOPSIS
The table below provides a summary of the demand estimates presented in the above sub-sections
and indicates the minimum required for the proposed development to be sustainable. As indicated in
the highlighted boxes in the table below, the demand estimate exceeds the minimum average
required sustainable volumes under the following scenarios:


2010                                                      2015
     Low traffic, medium interception rate,                 Low traffic, medium interception rate,
     Low traffic, high interception rate,                   Low traffic, high interception rate,
     Medium traffic, medium interception rate, and          High traffic, low interception rate,
     High traffic, high interception rate                   High traffic, medium interception rate, and
                                                             High traffic, high interception rate



Table 23: Summary of both Existing and Future Potential Future Effective Demand for Fuel (Litres per
Month)

      Interception (Catchment)                        2010                                   2015
                 Rate                 Low Traffic        High Traffic        Low Traffic        High Traffic
    Low Interception Rate                      193 282            289 923            229 559                     344 338
    Medium Interception Rate                   275 512            413 267            327 221                     490 832
    High Interception Rate                     393 911            590 866            467 843                     701 764
                                                                                                      5
    Minimum Average Required Volume to be Sustainable                                       250 000

The conclusion drawn from these findings is that the proposed development will be sustainable and
therefore feasible. It is worth pointing out, however, that it may take some time before the project
yields the desired business results.



5
    Source: Urban-Econ Estimate based on industry averages, 2009
                                                         31


                                                                               Urban-Econ Development Economists
5. IMPACT ASSESSMENT

This section investigates the possible socio-economic impacts of the proposed development.
Specifically, it examines the likely impacts of the development on the fuel volumes sold by existing
filling stations, on surrounding land uses as well as on employment.


It is inevitable that the growth and development of a new filling station within an area will have an
impact on existing filling stations that are located in proximity to that filling station. It has been
indicated in a preceding section that there are currently no competing filling station within 7 km from
the site and that the likely impact on those that fall within the secondary market area of Empangeni
more than 7 km away are likely to be small. The likely impacts of the proposed development on
existing filling stations have been determined by considering the following:

   Location and nature of the existing filling stations;
   Demand that new proposed filling station is likely to exert; and,
   Impact of the proposed filling station on the existing stations.



5.1 CURRENT FUEL SALES VOLUMES PER MONTH, 2010

Table 24 below presents the estimated maximum, minimum and average volumes of fuel currently
sold by the existing filling stations in the secondary market every month. The highlighted figures
indicate monthly fuel volume sales less than the estimated 250 000 litres per month considered
necessary for feasibility and sustainability. It is important to mention that the calculations done here
do not take into account the proposed filling station.


Table 24: Maximum, Minimum and Average Fuel Volumes Sold Monthly by Existing Filling Stations,
          2010
                                                             Average Volume Sales per Month (Litres)
    No.       Filling Station Name           Operator
                                                            Minimum        Maximum       Average
    1     John Ross Service Station        Caltex            450 000           650 000       550 000
    2     Assagai Motors                   Shell             550 000           650 000       600 000
    3     Rex Henderson Road Excel         Excel             309 375           365 625       337 500
    4     Ritchie Landrover                Engen             170 000           200 000       185 000
    5     Olympic Service Station          Caltex            178 500           210 000       194 250
    6     Shell Fuel                       Shell             130 900           152 730       141 815
    7     Ford Richie Auto                 Engen             240 000           280 000       260 000
    8     Jackson's Convenience Centre     Engen             224 000           420 000       322 000
                           TOTAL                            2 252 775     2 928 355        2 590 565




                                                      32


                                                                        Urban-Econ Development Economists
5.2 IMPACTS ON EXISTING FILLING STATIONS

In order to determine the impact of the proposed development on existing filling stations, two
scenarios have been modelled. Both of them consist of estimating the impact of the proposed
development on the estimated maximum average fuel volumes sold per month by existing filling
stations is estimated. In addition, they both take into account the implications of the proposed
development on the sales volumes of existing filling stations. Furthermore, they use the estimated
minimum and maximum average volumes of fuel sold per month by existing filling stations to
determine the impact of the estimated effective demand of the proposed development.


As explained above, these scenarios or models have the same goal, which is to calculate the likely
impact of the proposed development on existing filling stations in the study area. However, their
underlying principles differ. The underlying principle of the first scenario is that the impact of the
proposed development is experienced equally by all existing filling stations in the secondary market.
For the purposes of this study, this scenario is given the name Average Impact Scenario. The second
scenario is based on the principle that the proposed development is experienced proportionately by
all existing filling stations. In this study, it is referred to as Proportional Impact Scenario.

The following table presents the estimated total and average demand impacts calculated for 2010 and
2015 respectively. These figures are based on the existing and future potential effective demand for
                                                               6
fuel (Litres per month) estimated in sub-Section 4.2 above .


Table 25: Total and Average Effective Demand Impacts, 2010 and 2015

      Interception (Catchment)                      2010                                  2015
                 Rate               Low Traffic        High Traffic        Low Traffic       High Traffic
    Low Interception Rate                   193 282             289 923            229 559           344 338
    Medium Interception Rate                275 512             413 267            327 221           490 832
    High Interception Rate                  393 911             590 866            467 843           701 764
    Total Demand Impact                           359460                                 426926
    Average Demand Impact per
    station                                        44933                                  53366



5.2.1 Impacts of the Proposed Development on the Existing Filling Stations, 2010


      Average Impact Scenario, 2010


Applying the principle that the impact of the proposed filling station is experienced equally by all of
eight existing filling stations, the estimated reduction in the fuel volumes sold by each of them is
44 933 litres of fuel per month in 2010. Table 26 below indicates the estimated average fuel volumes
sold by existing filling stations under this scenario.


6
   The total demand impacts for 2010 and 2015, respectively, were calculated by adding together the estimated
effective demand under each of the 6 scenarios described in Section 4, and then dividing the sum by the number
of scenarios. In order to obtain the average total demand, the total demand impact was divided by the number of
filling stations located in the study area (i.e. 8).
                                                      33


                                                                             Urban-Econ Development Economists
As indicated in the table, the proposed development is likely to lead to the fall in the monthly average
fuel volume sales by Ford Ritchie Auto from 260 000 litres to 215 000, which is below the desired
minimum of 250 000 litres per month. The other highlighted boxes indicate that the monthly average
fuel volumes sold by the corresponding filling stations were lower than 250 000 per month before the
estimated impact.

Table 26: Impacts of the Proposed Development on the Average Fuel Volumes Sold by Existing
            Filling Stations according to the Equal Impact Assumption (2010)
                                                          Average Volume Sales per Month (Litres)
 No         Filling Station Name         Operator
                                                            Minimum            Maximum     Average
  1    John Ross Service Station      Caltex                 405 067            605 067       505 067
  2    Assagai Motors                 Shell                  505 067            605 067       555 067
  3    Rex Henderson Road Excel       Excel                  264 442            320 692       292 567
  4    Ritchie Landrover              Engen                  125 067            155 067       140 067
  5    Olympic Service Station        Caltex                 133 567            165 067       149 317
  6    Shell Fuel                     Shell                  85 967             107 797        96 882
  7    Ford Richie Auto               Engen                  195 067            235 067       215 067
       Jackson's Convenience
  8                                   Engen                  179 067            375 067       277 067
       Centre

   Proportional Impact Scenario, 2010


The table below shows the estimated impacts of the proposed filling station on the average monthly
fuel sales volumes by the existing filling stations according to the Proportional Impact methodology.

As indicated in the table below, the new development is likely to a fall in the average monthly fuel
sales by Ford Ritchie Motors and Jackson’s Convenience Centre below the 250 000 litre per month
mark. All the other highlighted boxes indicate that the sales volumes were less than 250 000 litres per
month before applying the method considered in this case.

Table 27:    Impacts of the Proposed Development on the Fuel Volumes Sold by Existing Filling
             Stations according to the Proportional Impact Assumption (2010)

                                                            Average Volume Sales per Month (Litres)
 No.        Filling Station Name      Operator
                                                         Minimum       Proportion     Impact on Remaining
                                                                           %          Volumes
  1    John Ross Service Station     Caltex                450 000        20                        378 196
  2    Assagai Motors                Shell                 550 000        24                        462 240
  3    Rex Henderson Road Excel      Excel                  309375        14                        260 010
  4    Ritchie Landrover             Engen                 170 000         8                        142 874
  5    Olympic Service Station       Caltex                 178500         8                        150 018
  6    Shell Fuel                    Shell                  130900         6                        110 013
  7    Ford Richie Auto              Engen                 240 000        11                        201 705
       Jackson's Convenience
  8    Centre                        Engen                 224 000        10                        188 258
       Total                                              2 252 775       100                    1 893 315
                                                    34


                                                                          Urban-Econ Development Economists
5.3 FUTURE FUEL SALES VOLUMES PER MONTH, 2015

The following table presents average monthly fuel volume sales estimated for 2015. The figures
presented in this table indicate that the estimated average monthly sales of fuel are likely to be lower
than the 250 000 litres per month considered critical for business profitability and sustainability for the
following filling stations:

   Ritchie Landrover,
   Olympic Service Station, and
   Shell Fuel.

It is worth pointing out that the assumption made here is that the proposed filling station does not
come into operation.

Table 28: Maximum, Minimum and Average Fuel Volumes Sold Monthly by Existing Filling Stations,
            2015
                                                             Average Volume Sales per Month (Litres)
    No.        Filling Station Name         Operator
                                                            Minimum         Maximum        Average
    1     John Ross Service Station      Caltex              534 459          771 996             653 227
    2     Assagai Motors                 Shell               653 227          771 996             712 612
    3     Rex Henderson Road Excel       Excel               367 440          434 248             400 844
    4     Ritchie Landrover              Engen               201 907          237 537             219 722
    5     Olympic Service Station        Caltex              212 002          249 414             230 708
    6     Shell Fuel                     Shell               155 468          181 395             168 432
    7     Ford Richie Auto               Engen               285 045          332 552             308 798
    8     Jackson's Convenience Centre   Engen               266 042          498 828             382 435
                              TOTAL                        2 675 590       3 477 967            3 076 779

5.2.1 Impacts of the Proposed Filling Station on the Existing Filling Ones, 2015

    Average Impact Scenario, 2015


Applying the average or equal impact method to the estimated average monthly sales volumes
estimated for 2015 yields the results presented in the table below. As indicated in the table the
proposed development is likely to lead to a fall in the minimum sales volumes of the Ford Ritchie Auto
and Jackson’s Convenience Centre below the 250 000 considered to be critical for long term
sustainability. The other highlighted boxes serve to indicate that the sales volumes estimates are
likely to be lower than 250 000-litre per month mark regardless of whether the proposed filling station
comes into operation or not.




                                                    35


                                                                         Urban-Econ Development Economists
Table 29: Impacts of the Proposed Development on the Average Fuel Volumes Sold by Existing
          Filling Stations according to the Equal Impact Assumption (2015)
                                                              Average Volume Sales per Month (Litres)
 No          Filling Station Name          Operator
                                                                Minimum          Maximum       Average
  1      John Ross Service Station      Caltex                   481 093         718 630         599 862
  2      Assagai Motors                 Shell                    599 862         718 630         659 246
  3      Rex Henderson Road Excel       Excel                    314 075         380 882         347 478
  4      Ritchie Landrover              Engen                    148 541         184 172         166 356
  5      Olympic Service Station        Caltex                   158 636         196 048         177 342
  6      Shell Fuel                     Shell                    102 102         128 030         115 066
  7      Ford Richie Auto               Engen                    231 679         279 186         255 433
         Jackson's Convenience
  8                                     Engen
         Centre                                                  212 676         445 462         329 069



      Proportional Impact Scenario, 2015


Assuming that the proposed development will affect the average fuel sales volumes of the filling
stations under analysis proportionately, the fuel volumes sold by Ford Ritchie Auto and Jackson’s
Convenience Centre will be below the 250 000 litres per month threshold by 2015. The fuel volumes
sold by Ritchie Landrover, Olympic Service Station and Shell Fuel which are currently lower than
250 000 litres per month, will still be lower than this threshold.


Table 30: Impacts of the Proposed Development on the Fuel Volumes Sold by Existing Filling Stations
         according to the Proportional Impact Assumption (2015)
                                                                  Average Volume Sales per Month (Litres)
 No             Filling Station Name              Operator                                      Impact on
                                                                                  Proportion
                                                                    Minimum                     Remaining
                                                                                      %
                                                                                                Volume
  1     John Ross Service Station                Caltex                534 459        20          449 179
  2     Assagai Motors                           Shell                 653 227        24          548 996
  3     Rex Henderson Road Excel                 Excel                 367 440        14          308 810
  4     Ritchie Landrover                        Engen                 201 907        8           169 690
  5     Olympic Service Station                  Caltex                212 002        8           178 174
  6     Shell Fuel                               Shell                 155 468        6           130 661
  7     Ford Richie Auto                         Engen                 285 045        11          239 562
  8     Jackson's Convenience Centre             Engen                 266 042        10          223 591
                             Total                                   2 675 590       100          2 248 664



5.4 OTHER IMPACTS

The likely impact of the proposed development on the surrounding socio-economic environment is
discussed in this section by considering:

                                                         36


                                                                              Urban-Econ Development Economists
   The location of the site in relation to surrounding areas and facilities available within these areas in
    order to determine desirability of the development;
   The location of the site in relation to surrounding areas in order to determine its impact on
    surrounding land uses; and,
   The potential of the proposed development to create employment within the local economy.

    Desirability of the Proposed Development

The service offering will improve the levels of convenience to residents of areas that are in close
proximity to the site.

    Impact on Surrounding Land Uses

There is only a slight possibility that the proposed development will have implications on surrounding
land uses. This is because many of the places in the area surrounding the site are already in use. In
the area, land is used mainly for farming, residence and for a limited variety of industrial activities.

    Impact on employment

Constructing the proposed development will result in direct jobs being created for the construction of
the various facilities. Indirectly, jobs are also created in industries that provide goods, materials and
services. For example, an additional amount of goods used in construction will be required from
business and industries related to the construction sector.

In assessing the impact of employment related to the development the following has been
determined. To construct a filling station, the following contractors may be required, each with a
compliment of staff and sub-contractors / suppliers required to do the work. Some of these contractors
would only be on site for four to five days, only during the construction period:


   Building contractor – with 4 artisans, 1 supervisor and 12 labourers;
   Electrical contractor – with 2 qualified electricians and 2 labourers;
   Air-conditioning contractor – contractor with two staff;
   Ground works contractor – 1 supervisor and 10 labourers;
   Paving contractor – contractor with 4 labourers;
   Pump and tank installation contractor – qualified supervisor with 4 labourers;
   Canopy contractor – contractor with 8 labourers;
   Tiling contractor – supervisor with 4 qualified tile layers and 4 labourers;
   Shop fitting contractor – supervisor with 3 staff;
   Painting contractor – contractor with 4 painters;
   Ceiling contractor – contractor with 3 staff;
   Refrigeration contractor – contractor with 4 staff;
   Shop front contractor – contractor with 4 staff; and,
   Signage contractor – contractor with 4 staff.



                                                     37


                                                                             Urban-Econ Development Economists
The maximum total employment created on the site during the construction period is therefore in the
order of 99 persons. These persons will however not all be on the site at the same time and it is
estimated that the total possible number of persons working on the site at any one time is likely to be
in the order of 50 persons. The construction of the development is considered to be of relatively short
duration i.e. 4 to 6 months.

To operate the filling station (including facilities such as convenience store with bakery and car wash),
the dealer would need a staff complement of approximately 19 persons set out as follows:

   10 pump attendants;
   2 Cashiers;
   1 merchandiser ;
   1 baker and 3 staff;
   4 Car Wash staff;
   1 admin clerk; and,
   Domestic worker.

The employment that will be created by the proposed development should however also be
considered in relation to the employment that is already taking place in the area. Employment-
generating sites that are in close proximity of the development represent an additional, though not
significant source of employment for local residents. The temporary construction and full time
operating staff employment that will be generated by the proposed development will lead to the
increase in the level of employment in the area. However, this increase will not be substantial.



5.5 SYNOPSIS

This section has made a number of findings, including the following:

The proposed development is likely to have a secondary impact on the sales volumes of the eight
filling stations considered in this section in this study,

   Due to the proposed entrance of the proposed filling station into the local market, Ford Ritchie
    Auto and Jackson’s Convenience Centres’ fuel sales volumes are expected to fall below 250 000
    litres per month mark considered necessary for sustainability.

   The level local employment is likely to increase as a result of the proposed development.

   Introduction of a new willing station will lead to the increase in the number of convenience facilities
    in the primary market area. However, this development will have a limited impact on surrounding
    land uses.




                                                      38


                                                                         Urban-Econ Development Economists
6. CONCLUSION

The assessment of the proposed filling station conducted in this study indicates that it will be viable
and sustainable based on the demand for petrol in the market area. The flow of traffic and the growth
of volumes in the area due to the developments taking place is such that the station is likely to be
viable.

Section 5 presented the likely impacts of the proposed development on the estimated minimum
volumes sold by existing filling stations in terms of whether their sales will amount to more than
250 000 litres per month once the proposed development is in operation. Below are the main findings
the findings of the study, as indicated in that section:

   The proposed development is likely to have a secondary impact on the monthly fuel sales volumes
    of the eight filling stations assessed in this study. Since all of these stations are located more 7
    kilometres away from the proposed development site, the proposed filling station is expected to
    take away a small proportion of their share of the local market.

   Ritchie Landrover, Olympic Service Station and Shell Fuel, all have sales volumes below the
    250 000 litres per month threshold considered critical for sustainability and profitability. However,
    they are still in operation. This implies that Ford Ritchie Auto and Jackson’s Convenience Centre,
    whose fuel sales volumes are expected to likely to drop below this threshold due to the entrance of
    the proposed filling station into the local market, may not force them to close down due to the
    proposed development. It is worth pointing out that although the sales volumes of these filling
    stations are likely to fall, they are not expected to fall below the volumes currently sold by Ritchie
    Landrover, Olympic Service Station and Shell Fuel.

   The proposed development will lead to the increase the level local employment in the areas
    surrounding the development site. Both short-term and long-term employment will be created in
    this case.

   The development will lead to the increase in the number of convenience facilities in the primary
    market area.

   There will be a limited impact on surrounding land uses as a result of the proposed development.



Due to the above-mentioned findings, the proposed development is likely to be viable.


Urban-Econ

July 2010




                                                     39


                                                                         Urban-Econ Development Economists

				
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