HOW TO START A PROFITABLE COOKING GAS SALES & REFILLING PLANT BUSINESS IN NIGERIA
By Our Reporter
There are many methods of getting involved in the oil and gas industry in Nigeria. In this article, we’ll be taking a look at how you can set up and successfully run a cooking gas refilling business.
Cooking gas is one of the several by-products of crude oil and is quite cheap when compared to sources like kerosene, as well as being easy to use. Moreover, what other option do Nigerians have when kerosene price continues to soar and the option of electric heaters and stoves is just implausible?
Although most homes in Nigeria make use of fuel sources like firewood and kerosene, especially in the rural areas, it is becoming more common for urban dwellers to shift towards the use of LPG (Liquefied Petroleum Gas) which is commonly referred to as “gas” or “cooking gas”. Research has found that Nigerians used a combined total of 400,000 MT (Metric Tons) of LPG in 2016 as compared to 110,000 MT consumed in 2013. This gradual shift has opened a window of opportunity to would-be investors.
The reason for this transition is not farfetched; for one, the use of cooking gas for cooking is a clean and cheap alternative to other cooking methods.
Advantages of running a cooking gas refilling business In Nigeria
There is a large market for LPG. As has been previously stated, the demand for cooking gas in Nigeria is growing and will continue to do so in the foreseeable future. This means that there will be a need to cater to this increasing demand. Thus, starting and running a cooking gas refilling business is a good investment.
- It is profitable.
Riding on the heels of the previous point, running a cooking gas plant business in Nigeria is a highly profitable one. Since the demand is there (and high) you will almost always make huge returns from the investment.
- It is quite easy to set up.
Once you have the capital and know the necessary details of the business, it becomes easy to start this business.
Challenges of starting and running a cooking gas refilling business in Nigeria
Starting and running a cooking gas plant in Nigeria means that you have to consider the challenges associated with the business. Some of these common challenges include:
- It is capital intensive. Like any other business, starting a cooking gas plant requires a lot of money. This is because of the several equipment and facilities necessary for running the business. Besides, you may also need to hire staff for the daily operations of the business.
- Unstable prices. The cooking gas business is one marked by instability in pricing. There are times of price boom and other times of price plummet. Based on this fact, you need to be prepared for such times when the pricing may not be favorable to you.
- Exposure to hazards. Working in a cooking gas plant exposes you to the danger of gas intoxication. While the effect of gas inhalation may not be hazardous in the short term, it, however, becomes dangerous when done for a lengthy time period. Aside from the hazard of gas inhalation/intoxication, there is also the risk of a fire outbreak. As you already know (if you don’t know you should) that LPG is a highly flammable commodity. Just one error can lead to a fire outbreak which can cost human lives and/or properties.
- Location of the business. The location of your business is as important as its success. Setting up a cooking gas plant in an area where the majority of the people may not be gas users is wrong. As such, you need to site your cooking gas plant in an appropriate location.
Steps to start a profitable cooking gas refilling business in Nigeria
In order to successfully begin and run a cooking gas refilling business in Nigeria, you will have to follow the steps below:
Step 1: Conduct a feasibility study.
Cooking gas refilling business is not like your everyday business, it is one that requires you to have a significant understanding of the industry and what is obtainable. As a result, it is very important that you have good knowledge of the business by carrying out a feasibility study. Doing this will also help you to determine whether or not you should venture into it.
Step 2: Write a business plan.
Writing a business is very important, so don’t neglect this step. Your feasibility study will help you in writing a good business plan for your intended investment. A business plan describes the mission and vision of the business, the business working model, how you are going to realize profits, as well as the long-term objectives.
Step 3: [Optional] Register your business.
Registering your business name is optional; it can be done at any of the C.A.C (Corporate Affairs Commission) annex offices across the country. While it is based on choice, registering your business is important if you plan on expansion in the future.
Step 4: Select a good location.
Selecting a good location is important to the success of your cooking gas plant business. The location of the plant will be dependent on the type of customers in the area; setting up such kind of a plant will mean that first, your customers make a good number of the population in the selected area. Moreover, there are regulations that guide the siting of such plants by the DPR (Department of Petroleum Resources).
Step 5: Acquire the land and get the necessary permit
After choosing a good location for your gas refilling plant, you will need to buy the land space. Afterward, you will have to visit the DPR so that they can assess the suitability of the land for a cooking gas refilling plant.
To get the permit for the next stage, the following documents are required by the DPR from you
- Proof of ownership of the land (C of O)
- Land survey plan of the site
- An application letter for the suitability inspection duly addressed to the comptroller of DPR of the state
- Tax clearance certificate for your business
- Certificate of incorporation and MoA (Memorandum of Association) of your business.
- Location map of the site area covering a minimum of a 1km radius of the area.
Step 6: Start the construction.
The next step after obtaining the approval to set up your plant from the DPR is to start the actual plant construction. However, you can only start construction after you have obtained a permit from the DPR. This permit or license is issued upon submission and verification of the following documents:
- Police report
- Fire planning approval
- Town planning permit
- Proposed plant architectural layout
- Environmental Impact Analysis test approval
- State land and physical planning permit
Step 7: Install the necessary equipment.
After you are done with the plant construction, the next step is for you to install the essential equipment and machinery for the plant operation. Examples of such equipment include gas cylinders, electronic and mechanic carousels, electronic and mechanic scales, valve screwing machines, and so on.
Step 8: Apply for a license of operation to begin business. When you are done with the installations, you still have to visit the DPR office again to obtain a license of operation. For this you are required to submit the following documents:
- Fire response report
- Pressure test report
- SON (Standards Organization of Nigeria) certification for the pressurized vessels.
After you have gained the approval to begin operations, you may have to employ staff personnel to help in the operation of the business.
Step 9: [Optional] Arrange for haulage.
This is an optional step. It involves you making arrangements for a means of transporting your products to customers’ location. While you may get your own hauling vehicles if you have the means, you can also get them on a lease.
Step 10: Advertise your business.
If you want your business to be profitable then it is important to publicize it. You cannot make any profit if people don’t patronize, and you may not get any customers until they get to know about your business. There are many ways of going about this including the use of your network. Telling your friends and family members about your business is a good starting point for putting your business on the map.
Step 11: [Optional] Get insurance.
This is another optional step. Since you have put in so much of your time and money into this business, it is only logical that you get insurance for it.
Much has been said already in this article, but much more needs to be done. Going through the steps outlined in this post will help to put you on the right track of setting up your own cooking gas refilling plant in Nigeria.
Finally, before you decide on acting on the steps given, it is also important that you seek for professional advice from an experienced person in the industry. Doing this does not only arm you with the necessary knowledge but will also help you to avoid some of the common mistakes.