The oil products market in Ukraine, like many other industries, is facing new challenges, especially for regional networks of gas stations. In 2024, unfortunately, about 1.2 million people left Ukraine, which increased economic instability and caused a decrease in consumer activity. This was reflected in the fuel market, where the total volume of retail sales of fuel fell by approximately 15% compared to the previous year.
Regional companies are representatives of small and medium-sized businesses that play an important role in the development of the Ukrainian economy, contributing to the creation of new jobs, filling the budget through taxes and ensuring economic stability. In 2024, they created about 70% of all jobs in Ukraine, providing work to millions of citizens. According to the latest data, small and medium-sized businesses (SMEs) provide about 50% of the total tax revenue to the country’s budget.
Challenges in competitive conditions.
Small and medium-sized businesses face numerous threats in a market increasingly monopolized by large national companies. The biggest difficulties for regional networks are related to:
- Low sales volumes due to reduced consumer activity.
- Limited financial opportunities to reduce prices or launch marketing campaigns.
- A shortage of experienced workers who prefer large chains with better working conditions.
- High costs for ensuring operational activities.
In addition to the above difficulties, the situation is significantly influenced by regulations that create additional barriers for regional companies. For example, the adopted draft law No. 11416-d imposes an additional financial burden on gas station networks, thereby creating advantages for large national market participants and reducing the competitiveness of small networks. A decrease in fuel sales means not only a drop in profits, but also additional challenges for financial stability. However, having a deep understanding of the specifics of their regional markets, networks can choose a different path of development and create unique offers.
Survival strategies and use of competitive advantages.
In order to survive in the conditions of fierce competition, regional networks of gas stations need to develop strategies that will help use their unique advantages and strengthen interaction with government structures. Among the important directions:
- Communication with the state.
Regional networks of gas stations can strengthen their positions by actively participating in public discussions and communicating with state authorities. Advocacy in dialogue with the government will help improve regulation of the industry, especially in matters of taxation and licensing, which can create a significant financial burden. An important step is to create or join professional associations that influence legislative initiatives. Such associations can ask the state to introduce incentives for regional networks, which often work in difficult conditions.
- Business financial support programs.
To ensure support for small and medium-sized businesses, the state can introduce special programs that reduce the tax burden or provide financial assistance to entrepreneurs. Regional networks of gas stations should be active participants in such programs, applying for benefits, low-interest loans or grants for infrastructure development. This may include investments in upgrading equipment, implementing energy efficiency technologies or environmentally friendly technologies.Financial support from the state or global funds can provide the necessary resources for the development of regional networks and help them remain competitive in the face of economic difficulties.
- Community development.
For effective functioning and increasing sustainability, regional networks can unite into business communities that facilitate the exchange of experience, joint lobbying of interests, and mutual support. By developing the community, representatives of regional networks can also cooperate with educational institutions for personnel training, in particular for staff training, which will help reduce personnel shortages. Communities can also host events to share experiences, organize professional forums and conferences where new market trends and growth opportunities are discussed.
Effective communication with the state, use of support programs, as well as active participation in professional associations can help overcome difficulties and develop in conditions of fierce competition with large market players. In the future, these strategies will contribute not only to the strengthening of regional networks, but also to the stabilization of the Ukrainian economy, where small and medium-sized businesses remain the backbone of the country’s financial stability.
Igor Khirgiy
Head of the “Fuel and Energy Business” Association