In this article you will discover steps, secrets and processes every entrepreneur should know before starting a cooking gas plant business anywhere in Nigeria.
And this is structured in a training format. Each major headline is a course model. So, I also expect you to do the assignment at the end of this article and submit by WhatsApp. The number to submit the assignment is provided as well.
See this as an interactive article to help you prepare and test your knowledge of cooking gas plant setup to help you grow your knowledge of the business before investing your hard earned money.
Note: This information is provided free. Any request for payment of any kind is voluntary and not mandatory.
Understanding Steps To Setup A Cooking Gas Plant
Let’s start by looking at the huge potential of cooking gas plant business. Cooking gas demand is growing faster in the country now. The thought that every household will eventually be using cooking gas to cook one day makes it the biggest opportunity in the oil and gas industry, only second petrol station.
Think of it, the number of household in Nigeria that would be buying cooking gas regularly for cooking. The current Nigerian population is put at over 198 million people. How much gas will 198 million people buy year in year out for the rest of their lives? That’s how big this cooking gas business is.
Now, your job is to setup a cooking plant to tap into this huge potential. How do you go about setting up a plant?
Here are the basic requirements to gets started:
1. You will need a land
2. You will need government approvals
3. You will need a complete cooking gas dispensing plant
These are the three basic things you will need to setup cooking gas plant. Let’s now explain them further.
You Will Need Land
And it’s not just any land. The land you need must meet all the necessary conditions approved by the government in charge of approving cooking gas plants setup. The primary reason for this approval is to ensure that your gas plant doesn’t pose any form of fire risk for people and businesses around you.
Firstly, this land must be in a particular size, 100 by 100 feet size. I know that most plots of land are either in 100 by 50 feet or 120 by 60 feet. Just a few states like Delta and Edo that still sell lands in 100 by 100 feet size.
That means, you may require 2 plots of land if you want to get a land for this business. And the price of land differs state by state and location by location. I will. To be able to give you the cost estimate for your location. That will be your assignment to find out how much lands are sold in your area.
To setup a cooking gas plant anywhere in Nigeria you will need government approvals. There may also be some other federal or state government agencies that may demand some form of approvals from you.
The cost of getting all these approvals is different from city to city. You just have to find out for yourself what it will cost you. However, you should be looking at amounts in the millions. I always recommend that you plan for between N2 million to N3.5 million.
Complete Cooking Gas Plant
Gas plants comes in different sizes. Although they all do the same thing, dispense and sell cooking gas to customers. The different sizes also means different setup cost. The popular sizes are:
1. 2.5 metric tonne
2. 5 metric tonne
3. 10 metric tonne
Also, the plants come in either manual dispensers or automatic dispensers. And that’s how the cost also varies. While some prefer to build from scratch, some simply go the easy way by buying a complete turnkey brand new plant that’s already setup and can be operational immediately.
Getting Needed Government Approvals
I have explained briefly about getting government approvals for cooking gas plant setup. Here I will explain it more further. There are several approvals you may need. But government approvals is majorly for the location and the equipment you are using for the gas plant.
So, you will need to get the right land size, in the approved location, meeting all the necessary conditions for a gas plant location. (I recommend you hire a gas plant consultant to help with location assessment before you even buy the land.
And if you have bought the land already you will still need him to assess the location before you go for approval. This will save you lots of money. DPR charges you fees before inspecting the location to give their approvals.
Once the location is not approved you also lose the money paid to government. And it’s in the millions. I think hiring a consultant for as low as N150,000 to N250,000 will save you millions.
The approval for the land is the first stage. And that includes the following:
1. Town planning approval – cost around 100k
2. Fire service approval – cost around 50k
3. Police report – cost around 50k
4. Environmental assessment report – cost between 800k to 1.2 million
Town planning is to ensure that the location meets the plan of the city and doesn’t block any infrastructural facility or affect future plan of the town. While the fire service is just to ensure the safety of lives and property around the location. For the police report, it’s to check for any security risk the plant might pose in the area.
The environmental assessment is the big one. And it equally cost much. Everything is assessed here including the soil of the land.
But the right place to start is with DPR. Cooking gas plant falls under their purview. By starting with them it will help you see all what may be required. And they are the one to give the final approval for you to build or not to build a gas plant.
DPR Approval To Construct
Also, after the land is approved, you will now need DPR approval to construct the gas plant. Without this approval you cannot construct anything. And this approval only comes once the location has been assessed and approved as meeting all the necessary requirements for a cooking gas plant.
The next and final approval is the cooking gas plant itself. After you have built the plant you still need DPR to approve it and give you permission to start selling cooking gas.
And each stage of this approvals will cost money. That’s why I recommend that you plan for as much as N3.5 million. Apart from regulatory approved payments, you know that government official will also be trying to extort money from you as well. If you don’t give they may not fill your request and you won’t get approvals.
You may also hire a consultant to help. The payment for a consultant varies. You have to pay for their hotel and feeding as well plus consultation fees of 50k to 100k for each time they come for the approvals. It’s not done everyday though. But it can take months before approvals is finally given.
Setup & Cost Requirements
When setting up a cooking gas plant, you should know that DPR will inspect and approve the plant before you can start operation. It’s important that you build according to DPR specification.
You might need a consultant to supervise, if need be. You can just pay him a consultation fee, transport and hotel accommodation. It’s not more than two days for each visit even if he is coming from outside your city.
I have already shown you the different popular sizes of cooking gas plants. Now let me add the estimated cost prices to them.
1. 2.5 metric tonne – cost between N4 million to N6.5 million
2. 5 metric tonne – cost between N8 million to N12.5 million
3. 10 metric tonne – cost between N16.5 million to N19.5 million
Manual And Automatic Dispensers
You can decide if it’s Manual operation you want, or automatic dispensers. The prices differ. Even in the automatic dispenser there are one nozzle and two nozzle. You can also combine Manual and automatic dispensing units together.
You can also decide to fabricate the plant from scratch or just buy off a turnkey equipment. Some even buy used tanks with new accessories for the setup. Whichever option you choose kindly note that it will have to go through the watchful eyes of DPR approval team.
However, there are different companies selling these may also be an issue. The market is full of many sellers trying to make profit. But you must consider the long term advantage of whatever choice you make.
Cheap Is Not Always Better
It’s easier to want a cheap gas plant to save cost of setup, but these cheap options may be very costly at long run. As a consultant it’s hard to convince a Nigerian to buy a more expensive gas plant when he can see a very cheap and affordable option in the market.
They usually feel you want to cheat them or sleaze them of millions of naira. But what many do not know is that a cooking gas tank and it’s accessories all have duration stages. The tank is around 20 years.
That’s if it’s a new one from Europe. If it’s china the duration may be less. And if it’s used one, which you may not even know how long it’s been used, it may be far less duration.
Think properly before you buy. Or better still let a consultant guide you. Paying little to gain much is not a bad deal. Don’t be pennywise and pound foolish. Don’t make mistakes that would cost you more than it should if you have done the right thing.
If you want to go it alone by yourself, you can find many dealers of cooking gas plants online. Just use your Google to search. And contact them and make your enquiries. But if you need a consultant to guide you, it would cost you more than 100k consultancy fee, plus transport and hotel accommodation. Be wise.
Cooking Gas Startup Documents
Let us also look at the documents you might need in this business. I will also be explaining why you need them and how you can get them if you don’t already have them.
Some documents are *highly important*, some are *averagely important*, while some are *fairly important*. But if you can, get all of them ready. Nothing is too much to do for your business to be successful. What matters is how useful they are to the business.
Here are a list of important cooking gas plant setup documents you may need:
1. Company registration certificate
2. Tax clearance certificate
3. Cooking gas business plan & feasibility study report
4. Cooking gas business proposal
5. Cooking Gas Plant Business Manual
Company Registration Certificate
This document is *highly important*. Without it you cannot start any of the approval processes for setting up your cooking gas plant. Your company needs to be registered with Corporate Affairs Commission (CAC) and have a registered certificate. It can cost between N37,000 to N500,000 to register a name with CAC.
Tax Clearance Certificate
You need to be a tax paying company to get approval from government. If your company is already existing, you should have been paying tax. But if you haven’t paid tax or it’s not up to date, you need to update your tax payments.
Even if you just registered your business, you also need to get tax clearance as a new company from the tax office. This one is also *highly important*.
Business Plan & Feasibility Report
Only a fool will want to build a house without a building plan. And many entrepreneurs in Nigeria are like that. And they wonder why the business collapsed after some years. Your business plan helps you see what kind of business you are building. While a feasibility report shows you how viable it will be if everything is done right.
This one too is *highly important*. What’s the point of investing millions in a business you are not even sure it will be profitable? It costs between N35,000 to N350,000 to get both reports depending on the size of your cooking gas plant.
This document is *averagely important*. A business proposal is a letter you send to an investor who may want to give you money for the business. It gives them insight into what your business is all about, what makes it different and profitable and how much you are asking for and why.
If you need to get someone to give you money this document will help explain better than going to him and making a fool of yourself. When he sees this document he will know you are serious. You can get this document written for you for just N25,000.
Cooking Gas Business Manual
This document simply explains all the steps to setting up a cooking gas business. Although, I consider this as *fairly important* I will advise that you get you. Here is my reasons. It’s a way for you to show appreciation to me for teaching you about this business without asking you to pay anything.
A seminar like this can cost as much as N50,000 per person and you will transport yourself to Lagos to attend. Pay hotel bill and feed yourself as well. It would have cost you more than 100k in all.
But I have given it to you *FOC* Free Of Charge. But you can appreciate me by buying this Manual for just N5,000. And if you don’t have that much just pay any amount you wish. It’s okay. The idea is not to sell you something. But an appreciation is ok.
*Pay into GTBank A/C No: 0051480355, Fastweb Internet Services. Thank you!*
How Much To Setup Cooking Gas Plant?
First, let me clarify this. The cost of setting up a cooking gas plant will not be the same for everybody. Mr. A may spend 100k while it may cost Mr. B 500k. So, the idea here is to help you look at how much it might cost you and not a general idea of the cost of setup.
For example, if I purchased a land for N6 million, another person may buy the same land for N4.5 million in the same city or even in another city. You can see that we already have cost differences.
In this cost, I want us to look at individually how much it might cost you to setup your own cooking gas plant. Forget about what others may say it cost them. Do your own cost analysis now.
The Cost of Land
Think of land as the biggest cost here. And if you are a real estate person, this should be the best investment you make in this business buying a piece of land. Even if the business eventually didn’t work you will never lose this investment. It will rather appreciate in value with time.
You can also decide how much you are budgeting for land. That means you have considered average cost of land in your preferred location before coming up with a fixed budget. And then get estate agents to look for the land.
So, this cost is also personal to each person. Find a suitable land. And like I advised, hire a consultant to guide you on the right land for cooking gas plant business. He may not even come to your city.
Just pay a consultancy fee and each land you find, take pictures of it and send to him. He will ask questions and then approve or reject it if it doesn’t meet DPR requirements. If he rejects a land, look for another one.
Total Cost of Govt. Approvals
I have already given you this cost. And like i said, it’s a general estimate. Yours can be lower or higher. It all depends on the DPR office and how you negotiated the different approval costs. Just have in mind N3.5 million and start cutting down each approval cost till you finish and now calculate your savings.
The best thing is to get these costs from either DPR agent or from the different agencies and set your mark on them. For example, if police report is 50k, you can plan to negotiate it down to 30k. But note that it won’t work for every cost. Some are already fixed and cannot be negotiated.
The Cost of Gas Plant
You have also learnt that there are 3 popular cooking gas plant sizes. These sizes are determined by the tank size. That is the capacity of cooking gas it can store and dispense. The sizes of the tank also helps to determine the cost of each plant.
You can chose the amount you can afford and link it with the size of the cooking gas plant that measures to it. For example, if you have a budget of N5 million for your gas plant, you can check the price estimates of the tanks and align it with the tank that fits into your budget.
Also, you can either start with a manual dispenser to cut your cost of setup. Adding an automatic dispenser can take up additional cost, up to N2 million. That’s how much you can be saving if you opt for Manual dispenser at the start. But you should later add a digital dispenser as your business begins to boom.
The General Operational Cost
I haven’t mentioned this earlier because it’s not part of the basic setup cost. However, you will need money for operation. After you have setup your plant, you will need to buy gas to sell. You will also need money to pay salaries for the the first few months of starting.
And if you want to sell gas accessories like cylinders and regulators, you also need to make provision to stock them. Selling those accessories will equally increase your bottom line. How much you budget for this might be up to you.
Money for filling your gas plant should be determined by the size of your plant. Just make a rough estimate for this or ask your consultant to estimate for you.
The Cost of Important Documents
Earlier I have explained on these important documents. You should decide on all the documents you want and put down their cost. This one won’t be hard for you to do. I have already given you estimate for them in one of the lessons.
On a personal note, I’m also expecting you to get the cooking gas Manual for only 5k. It’s a way to show me appreciation for teaching you and giving you all these useful information for free.
Cost of Consultancy & Services
I don’t want to leave this one out. I know that since you may be less experienced in this business, it will be wise to have someone who is more experienced to guide you. Even if you can’t afford paying for a consultant in everything, get him to act as your adviser.
He may just take only 100k consulting fee and will be at hand to advise you throughout the course of the project. That will be profitable for you than just being on your own and risk making mistakes that could cost you millions.
So, make provisions for areas you will need the services of a consultant and plan the cost implication as well.
1. What’s the cost of a plot of land in your city?
2. What size of gas plant is more suitable for you?
3. What’s the address of DPR office in your state?
4. Explain 2 ways a consultant can help you secure DPR approvals?
5. Do you know the difference between a Manual and automatic cooking gas plant?
6. What’s the maximum duration a cooking gas plant tank should last?
7. Name two documents that are highly important?
8. Explain why you need a business plan and relate it with a house building plan?
9. How many costs categories did I mention in this lesson?
10. Give me one of the most useful cost in the list and one of the not too useful cost?
Send your answers to this whatsapp number 07087770518. The best correct answer will get a free gift from me.