Do you want to start your own cooking gas business? Do you know the different types of opportunities in the cooking gas industry? Here I have compiled about three different cooking businesses you can choose to start now.
I will show you want to do, how to do them and why you should do what I’m telling you to do. And it’s not because I want to control your life. Every business has secrets and strategies that work.
If you are looking for how to invest in the LPG business value chain, here’s your chance to the most profitable ones you can invest in right now with certainty of success. All of the 3 options requires government approvals or licensing. You need to confirm with DPR for the particular licence required for each of them.
The good news about cooking gas business is that it has enormous profit potential. The profit margin can make you go green in envy. The retail price for one kilogram (KG) of cooking gas sell as much as N400 in most cities.
While this same one kilogram of cooking gas is supplied to gas plants at around N165 to N230 per kilogram. Now calculate the profit margin for each kilogram. With this kind of margin, anyone would like to go into cooking gas business.
But some cooking gas businesses will soon be restricted for everyone to invest in, like the cooking gas plant setup. It’s not like that kind of restriction though. But they will need to stop more investors from building new cooking gas plants at some point in time.
Only those who are able to get into it now can actually be the monopoly of the future in cooking gas businesses.
How it Works
The cooking gas business offers the most important product in the market. Every family need to eat cooked food. Even the restaurants all need to prepare their meals before they sell. And the investor who makes this important cooking gas available smiles to the bank.
In the cooking gas supply chain there are three key investment potential you can tap into now. These three control how cooking gas gets to the final consumers in the country. And if you are interested in cooking gas businesses, these three are good way to start.
- LP Gas Refilling Plant
- LP Gas Cylinder Plant
- LP Gas Storage Plant
However, you may need the services of a consultant to help you in the setup process. Although, most Nigerian investors don’t understand the value of a consultant until they make giant size mistakes that cost them more money than they would have paid a consult to guide them.
We are going to look at these three cooking gas businesses and how you can start any of them. Note that the capital outlay provided here are all estimates. The cost might be higher or lower depending on some circumstances.
#1 – LP Cooking Gas Refill Plant
The cooking gas plant is the most profitable aspect of this business. It requires some bit of investment, but it has a higher return on investment. An average cooking gas plant can cost between N10 million to over N30 million to set up. But the profit margin is good enough to cover your cost within a short time.
Starting a cooking gas refill plant is one the easiest option in cooking gas business value chain. You can start an LPG plant in a location approved by DPR. The procedures for a startup are not complex.
All you need is the following:
- A land in a commercial location
- DPR LPG operating licence
- LPG plant of any approved size
- Site construction budget
- And some operation capital
Also, cooking gas plant by nature enjoys some form of monopoly that is as a result of government regulation and location requirements. This helps to eliminate competition and increases your profitability.
If you are looking at starting a cooking gas plant, I will advise that you first get some more detailed information, like How to Setup a Profitable Cooking Gas Plant Business Anywhere in Nigeria, by joining this free training online.
There are things you need to know about before starting the cooking gas plant. But you can get enough information from a business plan that outlays it for you everything you need to do about setting up your own mini gas plant.
#2 – LP Gas Cylinder Plant
Another major LPG business is coking gas cylinder manufacturing plant. Many people are only jumping into gas refill plants because it’s easier to setup. But gas cylinders is a major and integral part of the cooking gas supply chain. A fully built automated LPG cylinder manufacturing plant with a capacity to produce over 5 million pieces of high quality LPG cylinders annually is a huge investment.
The market potential for cooking gas cylinder is untapped. There’s an estimated 30 million households in Nigeria without access to LPG. You can target one of the regions with a cylinder plant. And the cylinders can be in different sizes of 3kg, 6kg, 12.5kg, and 50kg.
Also, In line with Federal Government’s directive on LPG cylinder ownership, you can tap into this scheme to distribute your cylinders in all the 774 local government areas in the country.
You can partner with the following to reach even the most remote locations across the country. Partnership opportunities include:
- LPG plant or skid owners
- Bulk buyers or dedicated distributors
- And freelance marketers in all the major markets across the country.
#3 – LP Gas Storage Plant
Gas storage is an important investment potential in Nigeria. The role of gas storage in the cooking gas supply chain in key. And this one has multiple income sources as well. As a storage plant, you get to enjoy gas supply from NNPC or LNG as a major marketer.
So, you can sell to cooking gas refill plants. And you will also earn money from delivering the product to gas plants. That does not exclude you from selling directly to heavy consumers like eateries and hotels.
Also, this requires more investment capital than the other two. But it’s surely more profitable than them. While the refill plants get to sell in KG to consumers, a storage plant sells in trucks. That’s makes a whole lot of financial sense.
However, it’s also capital intensive, and requires you to setup strategically to cover a wide customer base to make profit sense. An average LPG storage facility can distribute up to 300 trucks of 20MT gas daily. That’s about 6,000MT sales per day.
Already, a huge potential exist in this business. There are very few LPG storage facilities in the country. You can hire a consultant to conduct a feasibility study for you to identify where the need for a storage facility is much and invest in that region. Note that a consultant can charge over N5 million to conduct such study for you.
Investments directions includes:
- Having a large expanse of land in a profitable location
- Getting DPR approvals for the facility
- Investing in haulage trucks
- Construction of the storage facilities
- And becoming a licence marketer for LPG
Tips To Know How Much To Invest
When starting any business, one of the things you need to know is how much you require to invest. While this information is crucial to your decision on that business, it’s not usually available just by asking. While anyone can give you an estimated figure, there’s actually no particular defined required capital for starting any business.
The amount you invest in that business will be specific to you. Another person could invest less or more. And that’s because different variables are at play for each investor. There maybe specific costs for some things but surely not all things involved in starting that business.
A good example is the cost of land or office rent that’s if you are opening a store. Even in the same state, rents are not the same for every location. So is land. And knowing all this, it helps you to know that no consultant can give you a cost specific to your needs without a proper business plan.
It’s like building a house. You cannot build a good house if you didn’t first of all draw a building plan. In fact, no architect will give you a cost analysis without first asking you to draw a building plan. And if an estimate is given you without a plan, just know it’s not going to be exact with your building project.
For each of the 3 cooking gas Businesses I listed here, it’s in your best interest to start with a business plan. A comprehensive plan would help you not only to know how much it would require to start but to have important information about the business you didn’t know before.
It’s also important that you get a custom plan for your business than just buying those general plan that’s packaged for no particular investor in mind. The more the plan seeks to address your own startup peculiarity the better for you.
Some people think investing in knowledge is too much. But going into a business without the proper education will cost you more than you need to invest in training. But the fastest way is to invest in a consultant. A consultant has all the knowledge and contacts you may require to succeed in that investment.
For any of the cooking gas Businesses, you will need land. Your choice will also depend on where you want to locate the gas plant. While for cooking gas storage facility business you will also need gas trucks.
Some cost will be determined by you. A land in lagos and a land in Delta state cost different. The size you need will be multiplied by the number of pilots. That’s to explain that you need funding for this projects.
Once you have arranged your funding, the next step is to invest the money rightly. Always buy a gas tank from companies established here in Nigeria. Don’t buy from companies in China, even though they might be cheaper.
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