Energy Market

How to Pick Viable LPG Plant Location

Viability Location

Picking a viable LPG Plant location to setup your cooking gas plant is the most critical decision for a startup. You know cooking gas plant is a location based business. so, if your location is viable your plant will be more profitable. I recommend that you invest wisely in picking your LPG plant location.  

Furthermore, don’t make the mistake of location no matter the reason.  Especially if you currently have a land space you maybe thinking of using for your LPG plant. A good LPG plant location ensures 80% of the profitability of your cooking gas plant. 

I don’t think you should take anything that ensures 80% of your business profitability lightly. Also, you should invest even more when picking LPG plant location. In case you don’t know, you can determine the potential of your location before starting your cooking gas plant. 

Its not just about the cost of the location. We know the cost of land varies from city to city and from location to location – including the size requirement. What’s more important than cost of land is the profit potential of the location for your LPG plant business.

Financial Potential Of LPG Plant Location

I strongly recommend the first thing you do before starting an LPG plant in any location is to know the financial viability of it. Don’t let anyone fool you into empty assumptions. Its important to do a professional location assessment. That’s how all these major brand get it right with their location. 

They don’t just go anywhere and start a business. Apart from doing their business plan, they never ignore doing location assessment, especially if its a location based business. If big brand are afraid of losing their money, you should be more afraid. 

You should spend tens of millions on a project without spending a few hundred thousands to assess the viability of that location. This mistake is what smaller investors make all the time and the wonder why they always fail in business and blame the economy.

Location assessment report done by an LPG consultant will give you a clearer picture of the viability of that location and resolve every doubt in your mind. Imagine how much confidence you will have in investing in that location. Location assessment is like prophetic voice – foretelling what you are going to see in your LPG plant location.

Steps to Pick Viable LPG Plant Location

For your cooking gas plant to be profitable, you need to setup in the best location in your target city. Although government regulation may affect where you can site your cooking gas plant but the closer you get to your target cooking gas consumers the better.

Choosing the best location would depend on your target city. But there are things to look out for. The higher the number of people the better. You also need to check their demand for cooking gas. Because, a large number of people in the country are still using kerosene for cooking.

If you setup in such location you will be struggling to make sells. So you need to avoid such mistakes. I know that eventually everyone will embrace cooking gas but until that happens your location target should be more of those who cook with gas stoves.

Things to Consider When Picking LPG Plant Location 

  • DPR will not approve location near school, church, hospital or places with large crowd
  • The size of your tank will determine the kind of location that’s suitable
  • Using petrol filling station is for only tank size of 5 tons and below. But depending on the location most 5 tons may not be approved.
  • Locate in close proximity to large towns or commercial areas if you plan to setup large cooking gas tanks of up to 20 and above tons. 
  • For mega LPG plant pick prime locations in the city. Think like mega petrol stations. 
  • Have the data of purchasing power for the location and how much your plant can attract from the total purchasing power

Most Profitable Locations: the price of land may affect where you locate your cooking gas plant. Avoid the temptation to buy or lease cheap space for your gas plant. The best investment in your cooking gas plant  should be your LPG plant location.

Take a clue from successful businesses like banks. They locate their branches in high brown areas. The reason is because the customers with the most money stay in high brown locations.

The same principle applies to your cooking gas business. Although you might face some challenges with even the customers who may push against the approval for your gas plant. But you can locate closer to a high densely populated areas of the city.

Land Size and Documentation

Another thing you must consider when setting up your cooking gas tank is the size of the land to use. It’s not really a problem but you have to meet the basic DPR land requirement.

The Directorate Of Petroleum Resources (DPR) recommends a minimum land size of 100 meters by 100 meters for cooking gas plant. Size of land is more than normal plot of land, which is 120 meters by 60 meters in some states in the west or 50 meters by 100 meters in some other states.

The states I known that sell land plots in 100 by 100 meters is Delta and Edo states. In other states you may require at least 2 plots of land to meet DPR minimum requirement.

It’s usually advised to just provide 2 plots of land to avoid any struggle with DPR. Although, some people still manipulate it with land survey. But I strongly advice that you avoid doing it. It might backfire in the future. However, the cost of land for your cooking gas plant is determined by the price of land in your city.

Related: How To Get DPR Approval For Cooking Gas Plant 

Land Lease Ideas for LPG Plant

Although, using your own land is the best advise I can give you, that doesn’t mean you cannot lease land or space for your cooking gas plant. However, leasing is not just for those who cannot afford to buy land.

I used to discourage leasing for several reasons but now I strongly advise you lease if you find the best location where you don’t have lands to buy. And if you are doing mini gas plant like the 2.5 or 5 tons, I recommend you setup in densely populated cooking gas consumer area.

But if leasing is the only option go for it. I recommend leasing space inside a petrol station as well. It has its benefits and can speed up your necessary approvals from DPR. Moreover, it reduces your setup cost. 

With leasing you also set it up in the city where the consumers live. If you are leasing space inside an existing filling station you beat all regulatory limitations that cooking gas plant have. By building a mini gas station that can be set up even in busy areas using already existing filling stations.

 

 

The Best Lease Option

Some filling stations are too crowded and don’t have even enough space for their own business and so can’t accommodate a cooking gas station by the side. So, looking for one with a spacious environment is vital. Also, you can choose to lease the entire petrol station and add your cooking gas station as a side business. Or you rent space from the owner of the station for your cooking gas station.

However, whichever option you may choice, always go for a long lease agreement. It’s just so that you stay safe from owners Manipulation. I recommend the lease of 5 to 10 years. It might even cost as much as buying your own land at the outskirt of town. But don’t be tempted.

If the site is perfect, I recommend you make an extended contract. And there is an excellent reason for that too.

However, if you are not so sure the site is excellent for gas business, just do a short lease and add a renewable clause that won’t allow the owner kick you out after the end if you still want to continue doing business there.

Importance of Location Assessment Study

I strongly recommend that you get an assessment study before setting up your cooking gas plant. A lot of business owners may not understand why I’m emphasizing on it. Unlike most businesses, that are now driven by the internet revolution, the gas business is controlled by its location potential.

And without a proper assessment report you might site the plant wrongly and give room for a competitor to come and take the best part of the market in your city or even nearer you.

A lot of times where you locate your cooking gas plant determines who patronizes you. The weight and size of cooking gas cylinders are also a contributing factor. Whether it’s the big or small cylinders, customers don’t want to go far to buy cooking gas from their homes.

The heavy cylinders require transportation during refill time. While the small cylinder owners won’t like to pay transport to go long distance just to buy as small as 2 KG of gas.

Reasons for Assessment Report for LPG Plant

  • It shows you the viability of your LPG Plant location before setting up your cooking gas plant
  • The report gives you the sales estimates and profit potentials of your cooking gas plant
  • It shows your the right estimate of consumer population and their estimated average cooking gas purchasing power
  • It helps to also analyze your cash flow so you can properly know how much running cost you will need to get started
  • Also, it can stop you from making wrong investment in cooking gas business
  • It also helps to provide you with all the necessary cost and expenditures so you don’t overspend on any thing during setup
  • And other intangible reasons

You can see that it’s not a waste of money to hire a consultant to prepare a proper LPG plant location assessment study for you. It’s actually a huge mistake if you don’t get one done before you get started. But to avoid making wrong investment decision you might regret later, get an assessment report for your location before starting out.

I consider it a wise investment to spend between N100,000 to N500,000 as the case may be to get a location assessment study conducted before setting up your cooking gas plant in that location. For your LPG plant location assessment study and financial viability analysis, call this number 07087770518. 

It can save you from huge investment loss in excess of millions. Who knows, but we don’t pray to find out. Rather let’s do the needful when it should be done.

Conclusion

The most important part of any building is the foundation. The same applies to cooking gas business. You have to follow the right steps to get it done right. Remember, it’s a business you probably know little or nothing about. You are better off with hiring consultants in cooking gas business.

However, I strongly recommend that you also get your business plan done as well. With a business plan and a location assessment study report you are good to start this business on a more guaranteed success plan.  That way, you wont start spending money when you don’t even know the viability of the business in your proposed location.

Think of it like this, it’s better you know first whether it would work or not than finding out later that the location is not suitable or there are fewer patronage for your business there.

MORE RELATED LINKS:

How LPG Gas Plant Works – A Complete Setup Guide
How to Package A Cooking Gas Business Plan

Chinedu David
About The Author: Chinedu David An inspiring writer with several years of experience in journalism, consulting and training. Worked with Success Digest magazine for over a decade. Founded MyStore - an online store in 2013. Trained several startup entrepreneurs in telecom sector, LPG (oil & gas), and on Cryptocurrency investment. A born again christian, who's committed to spreading the gospel of Jesus Christ with passion. Drop a comment below and he will respond to your query. He can also be reached via email: nedu@myblog.com.ng or Call/Text/WhatsApp: 07087770518
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