How To Setup Cooking Gas Plant Cheaper In 2020

How To Setup Cooking Gas Plant Cheaper In 2020

Do you want to start one business that its profitability is insanely awesome because people can’t STOP cooking food. That business is in the home cooking gas plant.

And I’m going to show you all about this business, how you can start it on small investment; how you can even have it where the consumers live that are easily accessible to buyers.

And all you need to know how to start this mini cooking gas plant immediately – faster than you can read this article.

If you haven’t read most of my startup articles on MyBlog, please do so, and you will find other businesses I have shared that can help you create a source of income.

THE OLD COOKING GAS PLANT:

Currently, the cooking gas plant is a very costly investment. In fact, DPR (The Directorate of Petroleum Resources) only approves a minimum of 100 by 100 meters of land space for the cooking gas plant. That’s at least a plot of Land. Although in some states you will require two plots of land to get an equivalent land size to match the DPR requirement.

In Lagos and most other states, you will need two plots of land to get this size of the area for the gas plant. Lagos lands are sold 120 meters by 60 meters.

In Abia, they sale 100 meters by 50 meters. I’m only aware that Delta sales 100 meters by 100 meters.

So, at the current land arrangements, you probably would be spending so much on just land acquisition alone before even considering other colossal cost implication of cooking gas plant.

For example, a 10-tonne cooking gas plant setup can cost around N30 million to N50 million to fully setup – including all the regulatory documents, land purchase, building construction, operation cost and gas plant equipment.

That is not a manageable amount to come by these days. That does not exclude the fact that your cooking gas plant has to be setup outskirt of town – in a remote location that is far from the city where most of the consumers live.

That is not an excellent site for a business that wants to be profitable. That is why many gas plants are shutting down and becoming unprofitable. If you locate outside the busy city, you will only attract little patronage.

LEASING A COOKING GAS STATION:

Here is my deal, I want to show you how you can set up at a lower cost. And also set it up in the city where the consumers live. And beat all regulatory limitations that cooking gas plant have. By building a mini cooking gas plant, with an LPG Skid plant that can be set up even in busy areas using already existing filling stations or land.

This mini cooking gas plant are capacities from 5 metric tonne down to 0.5 metric tonne plants. For example, a 2.5 metric tonne cooking gas plant can be allowed around semi residential area. And you can find such location within the city Centre’s or close enough to where the consumers can access you.

One of the 5 year plan of the government through its new gas policy is to make cooking gas accessible to the consumers. So, your mini cooking gas plant is in line with government policy.

But you will still need to get DPR to approve it for you. Most times, it advisable to conduct location assessment before applying for DPR approval. The reason is once you have applied for approval if your location is rejected, you also lose the millions you might have paid to government for the approval.

LOCATION ASSESSMENT REPORT:

So, spending a little change to obtain a valid location assessment report will save you millions. An LPG gas consultant would charge between 200,000 to 350,000 naira to conduct a test for you. Another short cut would be to pay the consultant just 100,000 and foot his transport, hotel accommodation and feeding for the two or three days he will visit your site.

I always recommend you foot their bill and pay just 100,000. It’s a lot cheaper. A two nights hotel won’t be more than 20,000. While feeding could be around 10,000 and transport To and fro not more than 20,000. That keeps your overall cost as 150,000. When you calculate it like this you can even pay the consultant 150,000 and let him sort himself out.

MORE ON LEASING:

You are getting the picture clearer now. There is no city in Nigeria where you can’t find filling stations in major city area to locate your mini cooking gas plant.

In fact, in major roads leading to many estates and even GRA’s we have filling stations. And these are the routes gas consumers take to work and their homes.
They pass these filling stations every day, and many of them never go to the outskirts of towns even in a whole year, unless when they are travelling or visiting someone there.

These stations are your secret weapon to set up your cooking gas station closer to the consumer. Although you will still need approval for them. And the requirement for a skid plant in a filling station might also make some filling station not suitable.

Now, you have to follow my instructions on how to go about it. It’s not every filling station that may be ideal for it.

LONG LEASE OPTION IS GREAT:

Some petrol stations are too crowded and don’t have even enough space for their own business and so can’t accommodate a cooking gas plant by the side. However, you can also lease an empty land. Although, that would require paying more money for regulatory approval.

So, looking for a petrol station with a spacious environment is vital. Also, you can choose to lease the entire petrol station and add your cooking gas plant as a side business.

Or you rent space from the owner of the station for your cooking gas plant. I recommend the lease of 5 to 10 years. It will also be much cheaper because you get to pay in bulk and that’s gives you advantage to negotiate the rent lower.

If the site is perfect, I recommend you make an extended contract. And there is an excellent reason for that too. But if you are not so sure the site is excellent for cooking gas business, just do a short lease and add a renewable clause that won’t allow the owner kick you out after the end of the lease, if you still want to continue doing business there.

COOKING GAS PLANT BUSINESS PLAN & VIABILITY REPORT:

Once you have a petrol station that you can use for your gas station, the next thing will be to conduct a feasibility study. I recommend you hire a good gas consultant.
But ensure that it’s a custom report. There are business plans being sold for 20k by big gas plant equipment companies.

I advise that you shouldn’t buy this report. It’s solely packaged to sell their equipment. And they will never visit your location to know if that place is viable. Such business plan is copy and paste.

The real intention of these companies is just to sell their cooking gas plant equipment. That plan is never written for the success of your own business. And it’s the same report that they give to everyone. The just update and add customer details and location and they have a business plan for you.

However, I strongly recommend you actually hire a consultant and pay him for a custom business plan with feasibility study. It may cost you around N150,000 to N300,000. It’s professionally done and customized to your need and location.

I recommend it – just go for the custom business plan prepared specifically for you with your location target. It will help you start, build and sell profitably.

GAS STATION APPROVAL REQUIREMENT:

The next plan will be to get the necessary approvals. You may also need to hire a consultant if you don’t know how to go about it. But cost of securing approval for setting up inside a petrol station and on empty land are not the same. You can find other of my report on this business for more details.

Here you will also need the corporation of the petrol station owner. I also recommend that you hung your lease payment on the approval of the place for a cooking gas plant.

So you don’t pay until DPR approves that station for gas business. That would give you the corporation of the station owner.

There may be several different approvals before DPR but that’s the work of a consultant to help you with, so hire one for it if must. But if you have the time do it yourself.

Apart from the government fees, a consultant may take up to N300,000 as a fee for his consulting services. Also, let me recommend that you might need a police report and fire service approval.

A cooking gas plant consultant, will help you every step of your project and also handles training of your staff and safety trainings for the cooking gas plant operations.

These might cost you up to N100,000 depending on the city. Then DPR charges are not so official. There are many charges that is. It fixed or stipulated. Maybe because it’s done by an external body outside DPR or simple a way DPR staff can extort more money for themselves.

Don’t ignore the Nigerian factor as well. There are money through the backdoor before even the payment payable to the government.

COOKING GAS PLANT SETUP COST:

If all these processes are done that you now have the station to use and it has been approved by DPR, then we move on to building the cooking gas station. Let me explain here that this kind of gas station is easily moveable since you are not the owner of the station.

Also, if the site is not doing so well and you wish to move to another place, it’s easily transferable. However, the cost implication for setting up may not also be fully captured here.

There may be civil works required which cannot be quantified without a professional assessment of the site and the level of work needed. But the cost of installation of the gas station is based on the capacity you can afford.

I always recommend you go for 2.5 tonnes for a start. The price is between N4.5 million to N6.5 million. If you can offer two of these to make it 5 tonnes, it will be perfect. The reason is so that you don’t always run out of gas entirely before you get a new supply.

As one tank is emptied, you are selling from the second tank while you call for a refill of the empty container. Also, these small capacity is what can be approved for a gas station. I don’t recommend building a single 5-tonne capacity either. And the significant size of 10 tonnes is only reserved for cooking gas plant that is outskirt of town.

There are also other cost implications, which I have explained in another article on this HERE.

COOKING GAS SUPPLY AND RATE:

Now that your gas station is built and ready to go, you will need to order your first gas and start selling immediately. By the time your building, the neighbourhood will be asking, what are they building here?

So, you have already done publicity, and now people are expecting to start buying cooking gas from you – don’t disappoint them. If you have the 2.5 tonne, which is 2,500 KG capacity, then you should be budgeting around N720,000 or less  to fill this tank, depending on the current preventing rate.

However, this is just an estimate because the gas price is not fixed. It changes regularly. Also, note that the price is inclusive of transportation cost. Some delivery trucks charge between N20 to N30 per KG. If you divide this N720,000 by 2,500 KG, you will get an idea of the gas rate. I know the prevailing retail price is N400 per KG.

Although like I said, this price can change, it’s as at the time of my writing. It can be lower or higher, but just know it’s moving and it’s not a static price. I hope this is very enlightening for you. If you need more clarification or my consulting services, please do contact me on 07087770518 or email me at nedu@myblog.com.ng. Contact us on this WhatsApp Number: 07087770518

About Chinedu David

Chinedu David is a business consultant, trainer, marketer and strategist. My services include: conducting business feasibility study, packaging business plan, new and existing product market insertion, design, build and managing hotels and cooking Gas plants anywhere in Nigeria. PS: You can reach me through any of these contacts ( For speaking engagements both local and international) : Call/Text/WhatsApp: 08139006120, 07087770518 or email: nedu@myblog.com.ng

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