Preliminary research into the opportunity to supply bunker services in Port Louis

Purpose of the study

A private equity firm commissioned Nova Economics to provide a preliminary assessment of the viability of a proposed bunkering facility in Port Louis, Mauritius. More specifically, our objective was to assess whether there is sufficient demand for bunker-only calls on the shipping route via Mauritius to support a facility this size. A further objective was to determine if the proposed facility will be able to win market share from existing suppliers in Port Louis and other competing ports by offering fuel at similar or more competitive prices.

Background and context

Our client was exploring investing in the bunkering industry (i.e., marine fuel supply) in Mauritius. The proposed project was the construction and operation of a ~51000MT tank farm for the onshore storage of bunker fuel at Mer Rouge within Port Louis.

The bunker supply market in Port Louis has become more competitive in recent years as the government has taken active measures to promote the development of Port Louis as a regional bunkering hub. Prior to 2014, all bunker fuel imported into Mauritius were sourced under contract from a single company and sold to local suppliers on a quota basis. The partial liberalisation of marine fuels from the beginning of 2014 means that while the bigger share of bunker fuel in Port Louis is still imported under contract, product above the allocated quota can be imported by the various suppliers from independent sources. This appears to have contributed to additional investment in infrastructure by existing bunker suppliers, the introduction of different grades of fuel and the entry into the market of a new supplier.

While the Mauritian Port Authority reported that there are currently six suppliers of bunkering services in Port Louis, two of the six suppliers are in a partnership resulting in only five distinct suppliers. Bunkering at Port-Louis can be carried at anchorage or alongside the quay. As a result of the Mauritian government’s efforts to promote the development of the industry, the Mauritius Ports Authority had also provided some further incentives in the form of reduced port charges for vessels calling for bunkering. This included a 50% discount on port tariffs items, namely, port dues, anchorage, pilotage and tug services.

It is within this context that our client as looking to assess the viability of the proposed bunkering facility in Port Louis.

Key findings

Based on research conducted on the existing bunker suppliers in the port, and their storage and delivery capabilities, we found that the proposed investment in a 51,000 MT storage facility would increase port capacity by approximately 60%. We found that bunker deliveries in Port Louis have increased substantially over the past 15 years with the increase concentrated in barge- delivered rather than pipeline delivered suppliers.

Our report also highlighted further information and research which needed to be conducted to determine the viability of the investment.

Impact of the study

Our client successfully invested in the Mauritian bunkering market.