Tag Archives: Buying Cooking Gas

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Mini LPG Depot: A Super Profitable Business Opportunity In 2022

mini lpg depot

A mini LPG depot is the solution to LPG distribution problem facing the country. According to statistics, Nigeria is having LPG supply problems, which is a result of limited storage facilities that is closer to most states in Nigeria.

Imagine that almost all the states in the west gets their supply from Lagos – including the North. Other locations where there’s LPG depots are Port Harcourt, Benin, Warri, Calabar and Akwa Ibom. Most these are coastal lines, since the supplies are done through ship. In the entire eastern and northern states, there no single LPG depot.

If you are thinking of an LPG investment that’s super profitable then you should be looking at mini LPG depot. The market potential is huge, and it can be conceptualized into a strong brand or monopoly.

I hate monopoly, but where you control the supply, distribution and sales in a market, you are the monopoly. Although, it’s capital intensive, but if you wish to go big you will need a good consultant to help you actualize the concept successfully.

How Mini LPG Depot Works

The challenges in the Nigerian LPG market created huge supply gap that’s becoming difficult to fill any other way. In all the years of existence of NNPC, the government organization that’s in charge of oil and gas, it has not been able to fill any of the existing supply gap.

But right now this gap can be filled with mini LPG Depot facility, by exploring the existing LPG regulations, with the right investment.

The idea requires you to identify a state or location that can cover multiple states LPG supply needs, and plant a mini depot there. This strategic location is your most epic advantage for a mini depot.

What’s Possible With Mini LPG Depot

You may want to know what’s financially possible as your returns from a mini LPG depot investment. If I may answer you from a statistical point of view, it will be a huge share of the 5 million metric tones of LPG domestic supply target.

Okay, that’s a general assumption. But if you critically look at the potential of a mini LPG Depot it’s huge.

Although, it depends on the mini LPG Depot business model you decide to adopt. If you agree to go with this model that would put you in an estimated financial position of over N500 billion annually. This estimate would depend on the network of your investment.

You should also know that so much resources is require to achieve a huge project like this.

The Role Of An LPG Consultant

It will be an error to want to embark on such project without proper guidance. You will need an experienced consultant who understands the business model of all the sides of LPG supply, distribution and retail.

A consultant who can properly encapsulate the whole concept of mini LPG depot. Help you put up a feasible plan. Help to search and advice on the right location for the mini plant. Help with the plan and execution of an effective marketing. Help to setup and manage the right team that would ensure the execution of the project. And be in the advisory team leader throughout the period of the project and beyond.

And talking about marketing – it must be prior and after the construction of the plant. During the course of feasibility plan, a marketing plan should be drawn with proper accountability of all the target retail plants within the defined market. This head count is important in established the profit potential of the project.

Basic Startup Requirements

The plan must be vast and inculcating every aspect of the business to give a full view of the investment. Cost shouldn’t be minimized. A proper analysis of all the risk, costs and requirements should be presented in the plan. A mini LPG depot business plan is required as a main requirement before anything else can be done.

It will give you the full overview of this project. At least, the plan should be able to do five things successful:

✅ Conceptualize the mini depot model and getting all regulatory approvals
✅ Identify a proper location suitable for a mini depot
✅ Address the issue of cost
✅ Create. a detailed marketing plan
✅ And get an estimated feasibility report

These are preliminary steps you have to take, even if it’s just to ensure the viability of the project before venturing into it. You shouldn’t even think going into a huge financial impact project like this one should be carried out without a proper assessments of the basic requirements before investing.

Analyzing Financial Requirements

It will not be proper to put together all the financial requirements without a proper business plan. However, I can give you an ‘tentative’ finance requirement, which can help you see where the money is going. That would give you an idea what would required financially.

✅ Large expanse of land – minimum of 2 to 3 acres of land
✅ LPG trucks – required number would depend on the operational plan
✅ Mini LPG plants – depending on your marketing plan
✅ Site construction – planning, materials and buildings
✅ Operational fund – needed for general operation which includes stock, maintenance, managing transportation, etc.

These are just the obvious financial requirements. You also have to consider consultancy fees, DPR licensing, environmental assessment study, host community fee (where applicable), some other procurements and logistics issues, etcetera.

However, a comprehensive mini LPG depot business plan will help put all these finances into proper perspective.

Getting Financial Support

Unless you can afford to offset the huge financial requirement, you may be needing financial support. Although, it’s easier to approach the banks here but that won’t guarantee success unless you have the right people to back the project.

Another source of financing might be getting foreign investors. Since it’s an oil and gas industry, it’s much easier to convince foreign investors to partner with you. However, you will also be required to meet some conditions to get such funds.

Moreover, one sure way to pull this whole thing through is to use your connections. Even if you are not a successful businessman or know people who do, you can approach business partners with a clear cut goal and feasibility projections.

Investors, whether local or foreign would like to see the potentials of any prospect before they can part with their money. You need to put out some convincing proposals with your business plan. However, foreign investors might want to see more than just that. They are more concerned about your involvement and what you stand to lose if the business should fail in your hands.

Location Requirement & Assessment

Money maybe key to this project, but the importance of location cannot be over emphasized. You need the right location for a successful mini LPG depot. A bad location is bad for business.

So, how do you begin to ensure that you get the right location for your mini LPG depot? The first step would be to define the scope or model of your mini LPG business. Your scope is important, because it helps to define your revenue target and best model to achieving it.

Some mini depot can target just the state where it’s located, while some can go beyond one state to target multiple states. Your model should be what defines your location. Your consultant should help draft the model based on your target and financial investment.

Even the location can be defined in the model based on your target consideration and closeness to the target markets.

Distribution & Supply Requirements

Mini LPG depot is just a supply and distribution outlet for LPG products. Your only advantage is closeness to your target market. As more and more LPG plants are being setup across the country, the demand for LPG products are increasing, even so is the cost of the products and transportation.

Your business is to provide LPG products to your market faster than the main depots. Most LPG plants would take advantage of your fast supply to restock LPG. So, you have to ensure the process of distribution is made available to speed the process.

You would be needing LPG trucks for this project. The best option is buying and utilizing your own supply trucks. This concept is cheaper and easier to control. However, you can also work in partnership with independent LPG truck owners to fulfill your supply needs.

Addressing Your Target Customers Needs

You should identify your customers, know what they supply challenges are, and make provisions for the right incentives to encourage them. Whatever your business model will be, let it focus on addressing the problems of your target market. That’s the best way to win your market.

If you don’t know what the real challenges in your target market is, then don’t venture into mini LPG depot. You may think you know just by reading this article, but that’s not entirely true. This post is addressing a general market view. The actual problem in each market maybe slightly different from this.

And it’s those slight difference that makes your target market unique. Depending on the model you may decide to adopt, don’t just think the only problem your main customers (the LPG plants) has is supply challenges.

How to Fight Competition

If you think because there are no competitors in the mini LPG depot business now that it would remain so for long, wait till you see how many investors that have read through this post, and how many are already consulting with me on it.

While I may not give you information about others seeking to embark on the same project, I can help you understand how to prepare against competitors. That doesn’t mean your competitors can’t do the same. But it helps you to position your business well in your target markets before they arrive.

One of the models of mini LPG depot is to create your own network of LPG retail plants across your target markets. This gives you a huge market potential and helps you position yourself in the best location across the city or your target market.

The more retail plants you have the more customers you can reach directly. This model works best than selling to existing retail plants, who may also have other supply sources, and may shift interest at any time.

Conclusion

A mini LPG depot is one of the most successful business ideas that has come out of LPG industry. It’s like the modular refinery model. If you want to make it a huge success, it would require huge finances. But if you consider how much turnover this could generate for you, then you will agree with me that it’s worth a venture.

I have tried in my own way to give moderate estimates in terms of revenue projection. But the real revenue can only be determined by the business model and how much investment you are willing to put in.

Note that it’s not a project for Beginners. You must have access to huge financial support or know partners who can command such funding. If you are interested in embarking on this project please make sure to start first with a comprehensive business plan.

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How To Start AutoGas Station In Nigeria

Do you know about AutoGas? There’s a growing policy direction in Nigeria to move the country towards AutoGas fuel. The policy direction is inspired by the large deposit of un-utilized gas in the country. Nigeria currently has over 200 trillion cubit feet of gas already discovered.

However, the consumption side is still at a very low rate. Current consumption rate is below 1 million cubit feet, which is even 4 million below government gas utilization target for the next 5 years. That means government hopes to add additional 4 million cubit gas to our consumption scale through AutoGas.

Imagine how large the AutoGas market will be in the next 5 years. Now, compare that to 10 years after. If you are not thinking about AutoGas now you are actually waiting to miss another huge opportunity that can make you a billionaire. The first to tap into major opportunities like this, always turn out to be billionaires. Ask Otedola and Dangote.

There are basically three ways gas is consumed in Nigeria:

  1. As Cooking gas
  2. As AutoGas
  3. For electricity generation

While gas consumption for electricity generation is limited to the number of power plants utilizing gas for power generation, cooking gas and AutoGas are the two higher utilization option for gas in the country. And AutoGas being the highest option if Nigeria hopes to tap into its large gas deposit.

So, in this post, I will be sharing with you a guideline into AutoGas business. I have already done several articles on cooking gas business, which you can also find on this blog, if your preference is cooking gas. But for those who are dreaming of how to tap into the AutoGas potential in the country, here’s is your simple guide to help you get started.

And if you need help, I will be glad to consult for you on the business.

Understanding AutoGas

Let’s get into the world of AutoGas. First, I will start by explaining the difference with LPG fuel from petrol fuel. LPG is a fuel gas – liquified petroleum gas or liquid petroleum gas (LPG). It’s also called propane or butane gas. It’s a flammable hydrocarbon gas mixture. Which is also used to fuel vehicles. That’s how it got its name as AutoGas.

This LPG fuel is a blend of propane and butane, used to fuel the internal combustion engines. It works the same for both vehicles and stationary generators. Even though this fuel is often called AutoGas it’s the same as LPG or cooking gas. So this gas will serve as an alternative to petrol and diesel fuel in vehicles.

However, with the current use of petrol cars, it would require a conversion before AutoGas can be used on cars in Nigeria. This conversion will enable cars to use any of the types of LPG fuel, which includes, propane, butane or a mixture of both propane and butane.

LPG-Autogas Fuel Versus Petrol Fuel

Let start by analyzing the cost. AutoGas is about half the price of petrol fuel. But in usage, you will be using about 20 percent more of AutoGas than fuel to cover the same mileage. This LPG is also in a liquefied gas, against petrol which is already in liquid form, at normal atmospheric pressure.

But AutoGas will save cost of operating your vehicle by 50 percent. It’s also said to be more fuel economy, including saving cost of regular vehicle maintenance, while it reduces or controls emission that could impact on the environment.

Also, AutoGas has a higher octane rating, which is over 100 octane. This will result in cost saving on fuel consumption of about 40 percent, compared to petrol. However, the savings on cars will be more to cover the cost of the conversion to AutoGas, especially for those who travel long distances, like transporters.

How AutoGas Conversion Work

Now, let me explain how this AutoGas conversion works. Although, there will be vehicles built to only use gas as fuel. But for the existing petrol cars, there will be a conversion to AutoGas to enable it operate on fuel-gas. It will be like adding a second fuel system, rather than replacing the existing fuel tank. Your car will be driving on two fuel systems, which you can switch at will.

This AutoGas conversion takes this simple process and require the following:

  • LPG tank
  • Intake manifold modifications
  • A new ECU
  • And various fittings

When your vehicle is converted, it will now run on both fuels – AutoGas and petrol fuel. And there are four types of autogas conversion systems:

  1. Converter-and-mixer systems
  2. Vapour phase injection (VPI)
  3. Liquid phase injection (LPI)
  4. Liquid phase direct injection (LPDI)

However, there’s actually no difference between AutoGas and LPG excerpt the addition of butane and propane. LPG is already a flammable hydrocarbon gaseous fuel. It’s only the inclusion of propane, butane or the mixtures of both gases that’s also known as AutoGas.

How LPG Engine Works

Let’s look at the type of engine that uses AutoGas. This is based on the four types of AutoGas conversion I listed before. Any of these systems or all of them will be used in Nigeria.

#1: The Converter-and-mixer systems which is the oldest style, and dating back decades, is still widely used. In this process, the LPG liquid fuel is converted into vapour and then mixed with air before going into the intake manifold.

#2: Vapour phase injection (VPI) is a system that uses a converter and mixer system, but the gas exits the converter under pressure and is injected into the intake manifold. And it’s electrically controlled injectors improve the metering of fuel to the engine, fuel economy and power, as well as reducing emissions. And this has been the most popular type system in recent years.

#3: Liquid phase injection (LPI) is a system that injects liquid directly into the intake manifold, where it vaporises, not using a converter. But the fuel vaporising in the intake manifold cools and increases the density of the intake air, substantially increases power output, improves fuel economy and with lower emission, when compared to VPI systems.

#4: Liquid phase direct injection (LPDI) are the most advanced systems. This one injects liquid LPG directly into the engine combustion chamber. And the LPG fuel instantly vaporises, cooling the combustion chamber fuel-air mixture during the compression stroke, with further performance and emission improvements.

Tips To Setup An AutoGas Station

Now, let’s get into the business part of this article. You have already learned a lot about AutoGas. Let’s see how you can convert this knowledge into money by starting your own AutoGas station.

The best way to view AutoGas station is to look at the petrol stations around you. Everything will be the same, excerpt for the equipments and product. If you are among those who would get started now, you will be taking advantage of government incentives and support at this stage of the business.

The federal government of Nigeria is really pushing for AutoGas inclusion. And it’s the best time to start the business than when too many regulations will be required to stop further investment or eliminate those who don’t have large capital to setup. Checkout the tips below to help you know how to get started.

#1: Study The AutoGas Industry

I strongly advise that you study this industry properly before you start your investment. There’s still so much to learn about AutoGas. And there is also opportunity to strategies on your plan while there’s yet to be competition.

What you know about the industry will define how you invest in this business.

#2: Prepare A Bankable Business Plan

A business plan is usually the best way to start preparing for any investment. It’s from your business plan you would formulate your best strategies. Also, you will need a professional AutoGas business plan to access government loans available in the national gas development program.

If you need a consultant to write the plan for you, it cost between N200,000 to N300,000 to package a proper business plan for AutoGas station.

#3: Find The Right Location

The location is too important for AutoGas station. You must ensure your station is located in the best place possible. In this business, the best location wins. You can’t afford to make such mistake with this one.

It’s important that you start now acquiring choice lands where you can setup your AutoGas plant. You may even acquire an existing petrol station. It will be cheaper to acquire the lands now than in 5 years time.

Also, don’t ignore to work with an AutoGas consultant to assess the locations for compatibility with DPR requirements and also profitable for your investment. Location assessment cost around N300,000 to N500,000 per location. For multiple location planning, it’s advisable to hire a consultant even in the acquisition of the choice locations.

#4: Get Regulatory Approvals

Like every oil and gas business, you will need regulatory approval to setup an AutoGas station. These approvals are common with other DPR approved businesses like petrol station and LPG plants.

You can get more information on DPR website or visit any of the DPR office near you. Note that you are not to begin setup without first approaching DPR for approval.

#5: Instal Your AutoGas Station

When we talk about AutoGas station, it’s primarily gas tank, dispensers, pumps, and accessories. You need to install AutoGas equipments. Get current cost of equipments. Design your station building plan if you are starting from the scratch. Remember to add installation workshop where the conversion of cars to AutoGas engine will be done.

The cost, equipment and installation of AutoGas station is not different from that of LPG plant. The size of the tank you chose determines the cost of the setup.

#6: Test And Start Operation

One of the most important and last approval from DPR is licence to sale. Once you get this licence it means you are finally approved as an AutoGas station. You can now open your station for business.

This can only happen after proper testing of the station and all safety requirements are adhered to.

Other Opportunities In AutoGas

One important opportunity to be directly derived from AutoGas is installation of the conversion kit. Each AutoGas station would need its own installers. Either employed in-house or outsourced to SMEs that can provide such technical services to car owners who would want to convert to AutoGas.

AutoGas Mechanics is going to be the main attraction at this beginning stage. The federal govern,net has already released the modalities for the conversion and the cost implication. For now, it would cost as much as N250,000 to convert your car to AutoGas.

Although, car owners won’t be paying cash for this conversion but it would be eventually paid up overtime. The idea is to deduct the cost of the conversion from AutoGas purchases. So, each time you buy AutoGas gas a percentage of the cost is deducted from that purchase to pay for the conversion cost.

If you are already a mechanical engineer, this could be your chance to reposition yourself in the auto business. Acquire the right skills for AutoGas engineering now. Already, fuel generators are being converted in the country.

Converting Fuel Generators To AutoGas

Another huge opportunity that already exists for AutoGas is generator conversion. The skill is already available. You can go learn it. If you are already a generator mechanic, it’s a chance to upgrade your skill. It’s not difficult, just in less than two days training you can acquire the skill.

To convert your generator to LPG generator, you will need to have the following:

  • A cooking gas cylinder
  • Filled up with gas
  • A low pressure regulator
  • 3 yards of gas holes and 2 clips.

That’s what you need to get for the conversion. The only thing that requires installation is the carburetor gas kit. While the low pressure regulator acts as the control on the top of the cylinder like the fuel tap. It’s from there that you have control to open and close the gas supply to the generator.

The installation is not hard. It’s just to change the carburetor, that’s all. Your generator mechanic can install it with little help if he hasn’t done it before. And the 3 yards of gas holes is to extend the gas cylinder a bit far from the generator.

Conclusion

Don’t think it’s going to take long before Nigeria moves into AutoGas consumption. It has already started. In the next 5 years the demand for AutoGas will exceed that of cooking gas. Imagine if cooking gas plant is a profitable business now, what do you think AutoGas would be like in the next 5 years.

Also, I encourage you to get more information or hire a consultant to develop an Investment document for you in AutoGas. The document won’t cost more than N300,000 to develop. With such investment document you can plant your Invest,eny in AutoGas.

The time to start your investment is now. You can start with location assessment and acquiring choice lands for your proposed AutoGas stations. The beauty of this is the multi dimensional approach to it. You can build a billion naira business with AutoGas. All you have to do is to be the first investors to rightly position yourself in the market.

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How To Practically Setup Cooking Gas Plant (Part 2)

 

In the part one of this video, I showed you the basic requirements to setup cooking gas plant. But in this second part, I will be showing you the processes of putting the requirements together into a gas plant.

The Processes

Let’s get to how to put these requirements together into a working cooking gas plant.

– Hire a Consultant

Your first step should be to hire a consultant. The problem with hiring a consultant is not knowing how much to pay. But, you can choose to pay as you need to use a consultant. That way you only pay a consultant to do specific assignments for you.

– Acquire a Suitable Land

The land must meet DPR location requirement for gas plant. It’s advisable to work with your consultant when acquiring a land for gas plant, to guide you on making the best choice. A consultant take between N50,000 to N100,000 for this service.

– Conduct Location Assessment

It’s always in your best interest to consider location assessment of the land for cooking gas plant. Location assessment will look into its Suitability and profitability for a gas plant. This should be done before you even start DPR licensing.

It cost between N100,000 to N200,000 for a location assessment.

– Package an LPG Business Plan with Feasibility Study

Whether you are looking for a loan or not, you need a business plan. You shouldn’t start a cooking gas plant without a clear picture of the profitability in your chosen location.

A professional business plan is packaged with your chosen location LPG market statistics. Don’t buy a copy and paste business plan that’s sold online. They were not packaged for your specific location and cannot give you a clearer insight into the profitability in your location.

Get a consultant to package one for you. LPG business plan cost between N150,000 for 2.5MT and 5MT plant size. But for 10MT and above it’s N300,000.

– Start Government Licensing

You might need to know what it would cost for the different licensing that’s required for LPG plant. Some of the costs listed here may be different in your location. This cost is just as a guide.

  • Police report cost around N20,000 to N50,000
  • Fire service approval is around N50,000 to N100,000
  • Tax clearance certificate cost N50,000
  • DPR approvals is between N2 million and N3.5 million

You can apply for all these licensing on you own. But if you need help contact a consultant.

– Purchase or Construct Your LPG Plant

Gas plants are like Manufacturing outfit, even though it’s job is just to store and dispense cooking gas into cylinders. You are either buying an already assembled plant or get a company overseas to construct it.

The only difference between the two option is price. It will probably cost less if you are getting it directly from the manufacturer overseas, as against buying it from a local vendor. You need DPR authority to construct (ATC) approval before you can buy or construct a gas plant.

Your consultant should help you with contacts to companies for any of the options you choose. And there are several companies to pick from.

– Install the Plant and Train Your Staff

After purchasing the plant, it would need to be installed in your approved location. Note that until you get DPR approval you cannot start installation of gas plant. That would be illegal to do so without approval.

You will also need an engineer to install the plant for you. If your consultant is also an engineer that’s a plus for your project. It means all the expertise is with you already. Installation can cost between N1.5 million to N3 million. Some plants are turnkey or plug’N’play. And doesn’t require installation.

– Start Selling LPG for Profit

Finally, its time to start selling cooking gas. Remember to conduct successful testing, and train your workers. This is the easiest part of the business, when you are counting money from the sales.

You can reach me by phone/text/WhatsApp Number: 07087770518 for more information. And subscribe to MyBlog TV YouTube channel.

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How To Practically Setup Cooking Gas Plant (Part 1)

I’m going to share with you the simple steps you need to setup  cooking gas refill plant. Cooking gas is as the name implies, is a gas for cooking. A gas refill plant is similar to a petrol station. But first, let’s look at the Financials.

– How Profitable To Setup Cooking Gas Plant?

Let’s start by exposing the profit potential of cooking gas business. Cooking gas is sold with a wide margin of between N60 to N100 markup. If you sell 30,000 kilogram per month, you make between N1.8 million and N3 million.

Now, I want to show you how to setup the business and start refilling cooking gas. I have broken it into two major parts:

  1. The Basic Requirements
  2. The Processes

– Basic requirements

If you want to startup this kind of business, you need to understand the basic requirements. I will explain it one by one.

– Startup Capital

The number one requirement is capital. You will need capital and lots of it. It’s not the kind of business you are asking, can one million or two set it up for me? This is not that kind of cheap setup businesses. Wait till I reveal all the other requirements, which your capital is needed to do. It will help you understand the capital requirement better. Let me not quote figures that may discourage you.

– Registered Company

You will need a registered company. In this case, not a business name or enterprise, but a limited liability company, dully registered with Corporate Affairs Commission (CAC), with at least 5 million share capital.

Note: Also ensure that one of the services the company is registered to do is Oil and gas services.

– Land or Petrol Station

You will need a land or a space in a filling station. The minimum required land size is 100 by 100 square feet. And it’s suitable for LPG plants not more than 10 metric tonnes capacity tank.

If you are starting with above 10 metric tonne size plant, you would need up to four plots of land. While setting up inside a petrol station requires a minimum of 1,300 square meters of space, and for a maximum of 5 metric tonne plant size.

– Government Approvals

You will need a approvals, and lots of them too. But the most important is DPR approval. DPR issues 3 stages of licenses for gas plant setup. Which are, location approval, authority to construct (ATC) and license to sell.

Other approvals required for processing DPR licensing includes:

  • Tax clearance certificate
  • Fire services approval
  • Police report
  • And Town planning

You will also need survey plan and environment assessment report carried out on the location.

– LPG Equipment Partner

You also need an equipment partner. Either a manufacturer (from China, Turkey or Germany) to build the plant for you or a local supplier.

There are different sizes of gas plants, but below are the popular ones:

  •  2.5 metric tonne plant
  •  5 metric tonne plant
  •  10 metric tonne plant
  •  20 metric tonne plant

The cost starts from N4,000,000 to N30,000,000. Setup cost depends on the size of the plant, the choices of equipment and the accessories.

– LPG Consultant

As a consultant, I won’t skip this part. Although, it’s essential to this business that you have a consultant with you. Unless you are an expert in the oil and gas, if not, you need a consultant. I will explain what the consultant would do for you in the next part of this video, which is in the processes.

You can reach me by phone/text/WhatsApp Number: 07087770518 for more information. And subscribe to our YouTube channel MyBlog TV. Also, ensure you also watch the concluding part of the video in the part of it. It will give you the processes to follow. CLICK HERE NOW TO WHATC PART 2.

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How To Reduce LPG Setup Cost In 2021

Every year, as activities begins to wind up, most people begin to make plans for the coming year. And as most people also lost their livelihood due to the pandemic, there’s limited funds available for startups of any business. As you plan to invest in cooking gas plant in this new year, I want to show you how to reduce LPG setup cost.
It’s okay to start early making plans for the new year. The pandemic may seem like a bad omen, but it also exposed things in the LPG plant business. As investors tries to save cost of setup, new revelations of doing things are also emerging.

One of it is how to reduce LPG setup cost. This will change the way you see LPG cost analysis in the coming year. Generally, LPG investment cost went down as against what it cost prior to this point.

What LPG Setup Cost Was Reduced?

There are three main cost factor in setting up LPG plant in Nigeria. Let me list the three in no particular order:

  1. Land or Location
  2. DPR licensing
  3. LPG plant equipments

These three are the real cost factor in LPG plant setup. You can see how they affect the business and their different roles as well. Let me take each one briefly to help you recap it better.

 

Land Or Location:

This one is what determines the profitability of the LPG plant. You can’t trade this one for anything else. The best location will always win in this business. That’s why you should invest in the best location.

That starts with buying land in a choice location. However, whether you buy in a choice location or not, it’s recommended that you conduct a location assessment. This report gives you clear insight on the viability of the location for LPG plant setup. A proper location assessment would cost between N200,000 to N300,000 depending on the part of the country you reside.

 

DPR Licensing:

This one is just the referee of the business. Without them you cant even start the business. So, you shouldn’t try to outsmart the referee for any reason. Get all the necessary approvals, and follow proper procedures as recommended by DPR.

If possible, hire a consultant to handle your DPR licensing process. Depending on your location, a consultant can take between N300,000 to N800,000 to help you process your DPR licensing.

 

LPG Plant Equipments:

Now, the last one on the list is even what makes your business work. It’s the soul of your business. Without this you don’t have a gas plant. You may have all the best idea on how to setup LPG plant but if you don’t get to the point where you build the gas plant, you don’t have any business.

Who builds your equipment and the cost implication is one factor you can control. And there are many options to this regard. You can choose to buy used or brand new equipments, Chinese equipments, or European equipment for your setup. Whatever you finally decide to choose is good. You only need to weigh its pros and cons.

The best LPG equipment is not just the cheaper one but the equipment with a longer lifespan. Remember, it’s going to be used on a daily basis. There would be normal worn and tear. The longer it takes for major tear and worn to show up the more cost it saves you.

 

How To Reduce LPG Setup Cost

So, it’s important how you handle the costs associated with the setup. Although, you may not be able to determine the kind of cost you get when buying a land for the gas plant location. This one maybe beyond your control. If you happen to save cost during the process, good. But don’t expect anything out of the ordinary.

The two known areas where cost is possible now is both DPR licensing and plant equipment purchase. Of course, DPR license was reduced from as much as N3.5 million cost implication to now around N2 million by DPR. That was government own way of deepening the increase in the number of gas plants in the country.

When it comes to LPG equipment, nothing actually changed in price. Yes, it wasn’t like price suddenly dropped. If there’s anything strange about Nigerians commerce is increase in dollar exchange. And that further increased the cost of LPG equipments. So, what really changed?

Since cost of LPG setup increased due to the exchange rate, most investors are looking at directly importing LPG plant equipment themselves, instead of buying from local dealers. This will reduce LPG setup cost by almost 50 percent.

 

Importing LPG Plant Equipment

Some people may become apprehensive when the issue of importation comes up. They start thinking of dollar exchange, shipping fee, duty fees, clearing fee and wharf rat (if you know what that means). But all that shouldn’t bother you at all. The idea of importing your gas plant equipment is to reduce LPG setup cost.

However, if you follow my guide you will have a successful import transaction. So, let’s get started. Your gas consultant should also be able to help you with reputable LPG equipment vendors to import from.

The first thing to consider when importing your LPG plant equipment is the supplier. In this case, we are referring to foreign manufacturers. You can find them in either China, Turkey, Germany and some other European countries. I strongly recommend that you buy from either China or Turkey. Most of them advertise online on social media as well.

 

China Versus Turkey LPG Equipment

I think the difference between these two are not that much, but I will try to refer to those things that really matter in this business. If you are importing your LPG equipment from China, price maybe cheaper than what you get from Turkey. So, if the cost is of major interest, then China is your target for a supplier.

Turkey is also cheap considering the cost here in Nigeria. And there is no much price difference between China and Turkey prices. It’s just some fraction of change. So, it might not make much difference cost wise if you buy directly from either China or Turkey.

However, when it comes to warranty, China doesn’t give any. You must know that what you paid is at owners risk. But with Turkey LPG equipment you get up to 20 years warranty on the tank itself, 2 to 3 years on the dispensers and 2 years on the pumps. You should discuss all these issues with your supplier when ordering. It’s always better to involve your gas consultant when doing this negotiations.

Shipping, Clearing And Transportation

Once you have ordered the LPG plant equipment from either China or Turkey as I advised, your next line of action would be to ship it to Nigerian and transport it to your plant location. You should put the cost implication in your advisement.

Once you have ordered the LPG plant equipment from either China or Turkey as I advised, your next line of action would be to ship it to Nigerian and transport it to your plant location. You should put the cost implication in your advisement.

Let start by looking at shipping cost in this regard. There’s no fix shipping cost, since size and weight is under consideration when shipping LPG equipments. But one thing is certain, the cost won’t be so cheap but it won’t be too high to cost more than it would cost if you had bought the equipment from local vendors.

Remember that those local dealers also shipped it from overseas. They paid shipping and added the cost in their equipment sold to you. So, whether you bought locally or imported it yourself, you are still paying for the shipping.

Another cost input is clearing fee and transportation to your plant location. Yes, after you paid import duty you still need to move the equipment to site where it will be finally installed. Duty is charged by custom and a haulage company would be needed to transport it in a big truck to your location.

 

Installation, Maintenance And Training

Now, who installs your equipment is critical. Remember I advised you earlier to hire a consultant during the discussion with the equipment supplier. A consultant may charge you N50,000 to N200,000 to be involved in this kind of negotiation. The consultant would ensure all the components and installation gadgets are included in the shipment.

Another way to go about this is to hire a consultant who has technical installation know-how. That way you hire the consultant both as an expert and the equipment installer. Because the challenge of importing LPG equipment is the installation. Don’t trust most of the so called ‘engineers’.

Different LPG equipments comes with different design specifications. An engineer need to understand the particular installation guide to do an efficient job installing it. Remember, this is gaseous product and should be handled with the strictest care.

Also, the maintenance is another thing. Outsource it to the right consultant or company. You need prompt response when there’s any maintenance issue. That also includes training your initial workers during takeoff.

 

Conclusion

Starting a cooking gas plant is cost demanding. That’s because you have to deal with land owners and at the same time equipment vendors. These are what drives up LPG setup cost. If you can acquire a less expensive land in a viable location and reduce the cost of LPG equipment, your startup cost will be minimal.

Moreover, you should engage the services of a cooking gas consultant when executing your LPG plant project. In the multitude of counsellors there’s safety. But the most important safety here is the installation process, which your experienced consultant would help you achieve successfully if you carry him along with your LPG equipment importation.

 

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5 Simple Reasons LPG Plants Are Profitable

Do you know how to start cooking gas business? Even if you do know, I want to share with you 5 more reasons you should be starting one now. If you have been procrastinating, stop it now and join this business. Even the government wants you to start now and not tomorrow. 

A lot of things are happening in the cooking gas business. And you won’t want to miss out the good part, which is to start cooking gas business now that the market is very juicy with less competition. 

If you have been observing the news lately, there is a push by the federal government of Nigeria to deepen the usage of LPG in the country.  And this push will start yielding results soon. If you have been procrastinating about starting your own cooking gas plant, this maybe the reason to revisit that plan and put it back to work. 

Understand LPG Demand Curve

For most people, LPG is just cooking gas. And as far as they are concern, it not such a huge business. Especially, the big investors. They consider LPG as business for the startup investor. They couldn’t see the huge figures. 

At most they say, 60,000 kg in monthly sales would give you just N16.8 million in monthly revenue. What they didn’t know is that gas plant have sizes. Moreover, if you setup 20 of those plants that would be N16.8 million multiplied by 20. Do the maths for yourself. 

Another excuse is that demand is not daily like fuel consumption. Yes, demand is not daily for cooking gas, but imagine the demand curve when 100 percent of the households in the country uses cooking gas. United nation puts Nigeria household figure at average of 6 persons. If you divide 200 million by 6 persons per household that would give you 33 million households buying cooking gas on monthly basis.

This demand curves is growing that’s why many can’t see it yet. By positioning yourself now in the market is like buying Bitcoin when the price was just 1 bitcoin to 0.0003 dollars. Don’t forget that this market is dynamic. Growth can be exponential. 

 

Why Start Cooking Gas Business

I have written several articles to help you start cooking gas business in Nigeria. You can see most of them when you search the content on cooking gas in this blog. There’s so much insight to get from each of the articles I have written on the subject. But this one is fresh reasons I would encourage anyone to start cooking gas business now. 

Although, I will still give more details on my reasons but I want to just list them out for you to see:

  • 9,000 filling stations approved by government to sell LPG
  • NNPC to build gas plants nationwide
  • Government to approve free cylinder for Nigerians 
  • Price of cooking gas set to fall
  • DPR lowers licensing fees

These are just a few reasons I can share with you now because they are recent happenings. There are a lot more reasons you should be investing in cooking gas business now. 

9,000 Filling Stations Approved

This may sound like it’s no news, but I tell you, it’s the biggest news in LPG industry. Government is pushing to deepen the consumption level of cooking gas and that should impress you. Gas would soon overtake petrol in the country. Some may laugh this off, but wait till you read my article on The Huge Benefits Of LPG Powered Cars. This articles would expose to you the reason gas would takeover our cars from petrol engines. 

So, the government wants to hasten the speed for LPG adoption in the country by approving its top 9,000 filling stations in the country to adopt LPG refilling. And that’s just 37 percent of the total number of approved filling stations by DPR. According to DPR, these stations are those with the required capacity to add LPG in their existing stations. 

 

The other 63 percent are also not left out. Let’s assume that the number of filling stations that make up this 63 percent are 17,900. That means in total we have about 26,900 stations nationwide. If all these have LPG installed, it’s huge and would force the adoption in just a few years time. 

NNPC Is LPG Stations Nationwide

If you think it will just end with independent filling stations, you are going to be shocked. Government is not leaving everything to just independent stations. NNPC and its franchise partners are also joining the train. 

Imagine how spread NNPC stations are, and what would happen as they open up new outlets and sign new franchise deals. As an investor it should be making you think how to leverage on cooking gas growth. 

The Free Cylinder Project

You should be acquainted with government plan to make cylinders free of charge (FOC). That project is not dead, it’s coming alive soon. As the country plan a switch from petrol to gas, its firing its drive on all cylinders. 

There’s a huge advantage from this free cylinder project. It will drive the adoption of LPG gas by making it easier for every household in Nigeria to switch to cooking gas.

This would increase exponentially the demand for cooking gas. That’s a huge return on investment for gas plant owners. 

Falling Price Of LPG

The whole reason for the drive for LPG adoption is to bring down the price. Due to low adoption level, it cost more to distribute the product across the country. There’s limit to the quantity to be made available for consumption. 

But as demand explodes, more investors like the Dangote refinery and Master Energy Petrochemical would emerge. The volume of LPG available would increase, and the competition to sell more would drive down the price. 

DPR Lowering Licensing Fees

Also, what’s more interesting for investors is the sudden love from DPR. Inasmuch as DPR would not want to compromise on its requirement on how to start cooking gas business in Nigeria, it has lowered most of its fees to drive adoption. 

Here’s a list of DPR requirements in terms of finances. The breakdown is in two options:

  1. Cost requirement for setting up standalone gas plant
  2. Cost requirement for setting up gas plant in filling station

Standalone Gas Plant:

  • DPR Approval: N300,000
  • Police Report: N150,000
  • Fire Service Certificate: N50,000
  • Authority to Construct (ATC): N400,000
  • Tax Clearance Certificate : N50,000
  • Tank Data Sheet: N100,000
  • Environmental Assessment: N600,000
  • Sundry : N400,000
  • Total: N2,000,000

Using A Petrol Station:

  • LPG Add-on License: N300,000
  • Fire Service Certificate| N50,000
  • Police and EIA: N100,000
  • Authority to Construct (ATC): N50,000
  • Tax Clearance Certificate: N50,000
  • Tank Data Sheet: N100,000
  • Sundry : N250,000
  • Total: 900,000

Note: some of the requirements mentioned above can be personally obtained by you to save cost. Yes, these rates are based on using an agent or consultant. It can save some small cost by doing some yourself. Like, police report and fire service approval.

Conclusion

One thing to takeout from all these is that LPG would takeover from petrol. That’s not just an imagination, it’s going to happen so fast. I give it just few years from now if government didn’t relent in this new drive for LPG adoption. 

And to use LPG to run cars it would increase the demand for cooking gas and it will overtake petrol. This is what the government want to achieve. To reduce dependent on petrol and start consuming the abundant gas resources in the country. Because gas is not imported and it’s being extracted naturally, requiring no refining.

All these would happen in a short time. As an interested investor, you should not procrastinate now. The race to take up slots in LPG plant investment is now. If you miss this first rush, the second rush may not be easier. I can imagine DPR would tighten its requirements once substantial quantity of LPG is being consumed in the country. 

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How To Join LPG Franchise In Nigeria

The potentials of cooking gas business is being explored everyday by discerning entrepreneurs. If you have been thinking of starting cooking gas business but had been hindered by finance, there’s another way around it. Now, the new strategy is LPG franchise.

This LPG franchise doesn’t entirely take away all of your financial requirement in starting a cooking gas plant, but it takes the heavy load off you. However, LPG franchise goes a long way to show us what could be possible in cooking gas business.

So, this post will explain not just how to join an LPG franchise but also how to start your own LPG franchise if you have the capacity to do so. There are so many startup entrepreneurs with limited capital but who would like to invest in an LPG franchise.

And there are investors who are thinking of how to tap into the huge potential of consumer cooking gas. You can become a franchise owner and partner with small and medium investors to grow your market share.

How LPG Franchise Works

LPG Franchise is not different from other forms of franchising. Of course it’s a Franchise deal and works the same way like every other franchise. Although, there are no fixed processes on how an LPG franchise should be. You can create a model that works for you.

To become an LPG franchise owner may require you to have a licence as a gas marketer. You will also need to either build, import or partner with a technical company to build the franchise plants. You need to have some advantage in the gas market to operate an effective LPG franchise.

And it all depends on what each franchisor wants. I will also be giving you an existing example, in case you want to see what’s obtainable already. You can use the exactly example for your LPG franchise or modify it to suit you. The best LPG franchise would be the one that attracts the right kind of investors.

Whatever you choose to do, the biggest part is marking it worth the interest of the franchisees. If the target franchisees are happy to signup then you have a better franchise deal. And it will be good if we can have more LPG Franchise options for investors to tap into.

What’s LPG Franchise

Let me start by explaining LPG Franchise model biggest advantages that would make investors happy to signup. An LPG franchise gives franchisees the opportunity to own a cooking gas plant without in eating so much. The investment requirement is shared between the franchisee and the franchisor.

There’s a defined part each party to the franchise would play in the arrangement. For example, the franchisee maybe required to provide the land property, while the franchisor builds and operate the cooking gas plant. While both parties share the profit of the business based on a sharing formula.

See below some identified reasons to better LPG franchise partnership:

  • Management level should be shared and not one sided
  • Revenue sharing should be well balanced and not taking advantage of one of the parties
  • Investment level should be shared to favour the franchisee
  • Franchisor should define its target market and level of investment plan

Now let’s look at these reasons in more details. I will start with management levels. A Franchise where just one of the parties runs the business and manages all its operations doesn’t create room for transparency. And most importantly the franchisee should be made to feel involved.

Also, the revenue sharing should be based on percentage and not a fixed amount. Since the business environment can be volatile sometimes, it’s best if no party takes undue advantage over the other. Percentage sharing would give both parties equal renumeration over increase in profit or losses.

While investment commitment should be made to favour the franchisee, since he or she is the lesser partner in this LPG franchise arrangement. Also, the tenor of the agreement should be negotiable and not determined by just one party in the franchise. There should be minimum tenor limit so that both parties can negotiate from that level.

However. It’s important that a franchisor defines its target market or have different franchise levels. For example, there should be a franchise for mini gas plant investors and another one for mega gas plant investors. The different franchises should have varied conditions and benefits. One size fits all wouldn’t be ideal for LPG franchise model.

NIPCO LPG Franchise Scheme

Let me clarify further with an existing example of an LPG franchise model. Already, a company in Nigeria is offering LPG franchise. First, before you decide to go into this franchise, I advise that you hire a consultant to advise you on it.

NIPCO LPG franchise is the only cooking gas plant franchise in the country. So, that leaves us with no other option. You either go with NIPCO or you start your own. If you want to know how you can start cooking gas plant business on your own, then read my earlier article on the business.

However, this franchise doesn’t give you option to decide or negotiate how you want it to go. NIPCO has already laid down all the rules and processes. All you do is either accept them or not signup for the franchise. Below is brief description of NIPCO franchise idea, what is required from you and what NIPCO brings to the table.

  • Ownership Status (Land/ Property): Dealer Owned
  • Brand/LPG Skid Owner: NIPCO PLC
Dealer: NIPCO Managed
  • Tenor: 10 years with a roll over option.
  • Management status: NIPCO Managed
  • Dealer Commission: N10:00 per kg.
  • Monthly sales target: 30,000kg. (Minimum)

Let me clarify the details above. In this LPG franchise with NIPCO, your most important contribution is to provide the land property for the gas plant. And obtain DPR licence (authority to construct). While NIPCO will build the plant, brand it in their name and manage the plant operations.

This franchise has a minimum tenor of 10 years. While the commission rate that would be paid to you is N10 for a kg gas sold by NIPCO. That’s what you are getting from the revenue. NIPCO will undertake all the operational cost, you only get N10 no matter how much profit is earned per kg of gas.

LPG Franchise Details Of Terms

Read below the terms of the franchise. It clearly defines what your responsibilities would be and that of NIPCO. It’s on this basis that you will sign the franchise agreement with NIPCO.

Here are dealer’s/partner’s responsibilities outlined below:

  • You shall provide suitable land for LPG outlet, free from any encumbrance, trespass or any form of 3rd party liabilities.
  • It’s your responsibility to handle and see to the resolution of any communal or governmental issues that would impede the smooth establishment and operation of the LPG plant.
  • Its also within your purview to procure DPR ATC – authority to construct, town planning approval and any other regulatory approval required for the purposes of conducting the LPG business.

Here is what NIPCO shall be responsible for in the setup of the franchise:

  • Investment relating to all civil, mechanical and electrical works on the station premises
  • Provide and install requisite generator, and shall also provide water supply (borehole) with adequate storage capacity.
  • Procurement and installation of the LPG skid and accessories
  • NIPCO shall be responsible for the day to day management of the LPG skid 
outlet and shall bear all overhead costs of running the LPG plant.
  • Take insurance of all the assets at the LPG plant.
  • Undertake all administrative efforts and financial costs towards the 
procurement of DPR license, Town & Country approval and any other 
regulatory approval required for the purposes of conducting the LPG business.
  • Maintenance and provision of spare parts for the skid.
  • Full branding of the skid station by NIPCO PLC.
  • Product will be solely supplied by NIPCO PLC.

How To Apply

NIPCO requires that you follow this process to apply for their LPG franchise scheme. Below are the basic requires for applying. Your application is also subject to approval by NIPCO. Who also would inspect your proposed location before accepting your franchise request.

However, it’s always advisable to conduct your own location assessment report before you start DPR licensing, which is a requirement for the NIPCO franchise. Location assessment can cost around N300,000. It helps you access both the requirement of DPR and viability of the business in that location. Hire an LPG plant consultant for this.

Requirements to apply for NIPCO LPG franchise scheme includes:

  1. Application letter on Company letter head
  2. Acceptance letter on Company letter head (after offer)
  3. Submission of the following documents (photocopies):
  • DPR approval (ATC)
  • Certificate of Incorporation, Forms C02 & C07
  • Title documents of the proposed skid station location
  • 
All the requisite safety approvals and reports
  • Execution of a dealership/memorandum of agreement between 
NIPCO PLC and Proposed dealer
  • Reasons To Join LPG Franchise

If you are wondering if LPG franchise is a good business for you, here are reasons to help you decide. There are benefits as well to enjoy from LPG franchise above the little commission you maybe getting. The most important consideration is, do you have the capital to start your own cooking gas plant?

If you have a land in a viable location and don’t have the capital, franchise maybe the best option for you if you want to tap into this business now. I strongly recommend that you conduct a location assessment to ascertain the viability of your land property for cooking gas plant before venturing into franchise.

Also, note that NIPCO would build the plant, including all the civil work. The structures won’t be taking away after 10 years of the tenor. They are all yours. You can use the proceeds from the commission to acquire your own gas plant equipments after the tenor expires.

NIPCO is a big brand in Oil and gas business, that would help you build a strong customer base in that your location in those 10 years, which you will leverage when they are gone.

Conclusion

Unless you have the capital to setup your own cooking gas plant, joining an LPG franchise may just be the right decision for you. Not every condition of a franchise that maybe favorable to the franchisee. If you go by NIPCO 30,000 kg minimum sales per month, then you can see that you are making N300,000 monthly, and that’s N3.6 million in one year, and N36 million in the ten years.

Even if you rent out that empty land, you may not get up to N36 million in 10 years. And the sales volume can be more. NIPCO used 30,000 kg as a minimum yardstick based on their sales experience in the industry.

You stand a better chance if your location is a prime one. That also means that NIPCO will be doing their own assessment before accepting your application. It’s better you are sure first before applying. It will save you the cost of all the required approvals NIPCO is asking for.

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4 Important Steps Profitable LPG Plant Follow

If you want to setup profitable LPG plant in Nigeria, you might as well read this now. There’s no science or mystery behind a profitable LPG plant. I often get this question about how profitable is LPG plant?

Although, I have tried to always assure my clients about the potentials and profitability of an LPG plant, but there are just 4 things that are responsible for that kind of success. It’s these 4 things I want to share with you.

If you pay close attention to these things and do them as I have advised, you will have the most lucrative LPG cooking gas plant in any location you will ever choose.

You may ask, how can I be sure that these 4 things are what’s important to setting up a profitable LPG plant? I’m telling you from experience, as a cooking gas consultant, and from working on several gas plants setup and the things I always advise my clients to do and it has worked 99% of the time.

If anything worked 99% of the time, it’s sure proof that it works every time. That’s why I can guarantee that it would work for you. And don’t just take my word for it, I will clarify it as well so you can see why it has worked and why it will work for you.

Profitable LPG Plant Analysis

As you plan to setup a profitable LPG plant, your first concern should be how profitable is the business? Don’t just assume it is, even though it’s actually very profitable. But there are reasons its profitable. You need to know those reasons.

That doesn’t mean every cooking gas plant in the country are profitable. There are lots of unprofitable LPG plants all over the country. So, just because cooking gas is in high demand doesn’t mean every LPG plant would be profitable.

It’s the same reason every petrol filling station is not profitable, even though oil business is a major revenue earner for the country. There are reasons you will succeed or fail in this business and that’s what I want you to know above other things.

For most startups in the LPG plant business, their interest is more on the profit margin than on the volume sales. The profit potential of LPG plant is not only on its high profit margin but majorly on volume sales.

A little calculation would help clarify this theory. Imagine if the retail price of cooking gas is N280 per kg, and the profit margin is N100 per kg, if the volume sale is just 100 kg per day that would be N10,000 profit daily. In a 30 days period it would be just N300,000.

While another plant could have the same margin but with 3,000 kg sales per day, which is N300,000 profit, and a monthly profit of N9 million. The only difference between this two examples is not about marginal profit but volume sales. Volume is key when planning a profitable LPG plant.

Problems Of Profitable LPG Plant

As a consultant, I deal with startups on a daily basis. One of the major problems of every business startups and not just for LPG plant startups is financing. They don’t have the required capital to venture in the business.

An LPG plant on construction

I often get this question, what does it cost to setup a profitable LPG plant? It’s usually the number one question I’m being asked everyday. By now, I know even Google is tired of answering this question, because the answer is simple yet most startups keeps ignoring it.

Most often, the reason people ask this is because they don’t have the money to setup the business. Or they have a wrong idea of what makes a Profitable LPG plant. If you don’t focus on the primary reason LPG plant would be profitable, you shouldn’t even venture into the business.

The problem with the financial requirement is that most startups don’t know where to invest much of their finances to start a profitable LPG plant. In fact, they disregard expert advise and prefer to cut corners to save cost. There’s only one cost investment that impacts in the overall profitability of LPG plant.

Problem Number One: Picking The Right Location

A profitable LPG plant location is not a mystery. You must know from the beginning if the location is right before setting up the business there. Although most people already have a location they have purchased before consulting an expert.

If you have already gotten a location purchased, don’t rush into the business without verifying if that location is right for the business. Your cooking gas plant location is the number one reason the LPG plant will be profitable. If you make mistake about this, you have failed from day one.

There are two reasons your location may not be right. The first one is if it doesn’t meet DPR approval requirements. That is the first stage, and it’s critical to setting up any cooking gas plant anywhere in Nigeria. The location must conform to DPR guidelines.

The second reason is the profitability of the LPG plant. You don’t want to only meet DPR approval requirement and not ensure the location would be profitable for your business. That’s why I strongly discourage setting up cooking gas plant in a deserted location.

You have to pick the right location for the business. I recommend you work with your consultant when buying the land. Get a cooking gas plant consultant to do site visitation and confirm it meets DPR requirements and will be profitable for your business.

Problem Number Two: Location Assessment

The assessment of the location before setting up an LPG plant is very important. It’s the first step in picking the right location. This assessment looks at the DPR approval requirements. This may look insignificant to you but the reason is to save you over N1 million cost in licensing if your application is rejected.

A consultant would help you assess the location before you start processing DPR approvals. If you don’t want to use a consultant, you can get someone from DPR to visit the site and give you the go ahead. It will cost you around N50,000 to N100,000 for this assessment.

I recommend that you use a consultant. It’s not because I want you to hire me. A DPR agent would have been better for this job but the problem is that they would only look at DPR requirements. But a consultant would also look at its viability, and you will still pay the same amount.

A location can meet DPR requirements and still not be a profitable LPG plant location. Understand the difference between DPR requirement and the viability of your LPG business. DPR is not interested in your business profitability. It’s not their job. It’s your job to ensure your business location will be profitable.

In reality, DPR agents don’t know about LPG plant location viability. You shouldn’t rely on their advise because it’s not their job. Their primary assignment is to check the land size, landmarks, government infrastructural installations that may be at risk if your plant is setup there, and how it puts others or businesses or residence around the area at risk.

Problem Number Three: Cooking Gas Viability Analysis

The second part of location assessment is the viability analysis. This should be part of the business plan feasibility study. In the location assessment the consultant would give you an observatory assessment of the location. But in a viability analysis, real data would be used to assess its viability.

Here the real location study is conducted to assess number of households within your target location that can purchase cooking gas from your LPG plant. A good viability analysis is not based on assumptions but real and authentic data.

There should be accurate data about number of households within the communities your LPG plant would be covering. A consultant should know how to get this data. And to be sure of the profitability of your cooking gas plant, ensure this data is made available to you in the viability report.

It doesn’t come cheap and you shouldn’t be stingy here. Pay the cost to get real information that’s not based on assumption. It’s between N150,000 to N300,000 depending on the size of your LPG plant.

Don’t be deceived by those selling copy and paste business plan feasibility report. Those report are based on pure assumption. I won’t advise you to risk your investment on someone else assumption. A profitable LPG plant is based on real verifiable data.

Problem Number Four: Expert Consultation

However, most of the real problems affecting LPG plant startups is lack of expert advise. Most startups don’t see the need to use the knowledge of a consultant. The only time most Nigerians pay consultants is only when they are terminally ill and are advised to see a medical consultant.

A startup is like a child who needs parental care. So, you should get a consultant to guide you so you don’t make mistakes. If you make a mistake at the startup of any business, that business is bound to fail sooner or later.

The Nigerian mentality of what is he going to do for me is costing startups more than they would pay a consultant. Imagine you want to invest N10 million to N50 million in an investment and you can’t pay ordinary N500, 000 to N750, 000 to a consultant to guide you properly. But you can afford to risk and lose tens of millions because you don’t want to lose ordinary N500, 000 to someone whose only intent is to help you succeed.

You can’t build a profitable LPG plant on ignorance. A client refused to pay just N200,000 for location assessment and ended up losing N1.8 million when DPR rejected his request for a licence. He thought he was wiser but became foolish at the end.

Don’t make costly mistakes. No one is after your money. We buy shoe to protect our foot. The shoe cobbler wasn’t stealing from you. The same way a consultant is just helping you. Think twice and don’t be misled by your own understanding.

Feasibility chart

Conclusion

There are two important things I want you to take out of this post. The first one is that a profitable LPG plant is primarily built around the choice of its location. It’s not on the amount of your investment. You can invest N100 million and still fail.

But your LPG plant location is key to your success. To solve this, you may need to buy choice location in your city for your LPG plant setup. This may cost more, but it’s worth it. Don’t ignore this advise, take it more serious than the actual plan to setup your LPG plant.

Finally, think of a consultant as your investment guide. A cooking gas consultant is not after your money, even though you pay him or her for the service rendered. He or she is there to help you succeed. And don’t be afraid of the cost. You can pay a consultant on the need to use basis.

That means, you can only pay him or her when you need to use them achieve something. It doesn’t cost so much to use the services of a consultant as you think. Just be clear about what you want and a consultant would give you an affordable rate for it.

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Grow Your Business

How To Increase Sales For LPG Plant

Do you own an LPG plant or you are thinking on starting your own cooking gas plant? But here, I’m sharing with you some of the ideas you can implement to increase sales for LPG plant.

It’s important that you read through and find some strategies that would work for you. There are several ways to increase sales for LPG plant, but not all of them may be applicable in your location. Some might be costly to implement as well.

As the huge Investment opportunity in cooking gas increases, so will the revenue starts to decrease as well. Because there will be more LPG plants targeting same location or even outrightly taking over some share of your market.

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When that begins to happening, as it’s already happening for some plants, how do you hope to increase sales for your LPG plant?

Understanding Location Based Advertising

If you already knowledgeable about advertising, you would be familiar with LBA or location based advertising. This kind of advertising was born at the beginning of the mobile phone era. Although, not much is being said about it lately because it’s virtually being used in every digital platform today.

This kind of advertising deals with targeting customers to patronize a business within a specified location. This advertising is targeted only at those who are within the preferred location, and at the time they can use the service or buy the product.

Feasibility Report For A Mini Cooking Gas Plant

So, this advertising favours businesses that are location based like LPG plants. The question is, how do you utilize such marketing to increase sales for LPG plant? How do you implement LBA for you plant, and what technology is most effective for your target audience?

Together we are going to be looking at some of the existing platforms you can use to increase sales for LPG plant. But it will be up to you to decide which one or ones that are suitable for you to use.

Tips To Increase Sales For LPG Plant

I have outlined these tips as a way to guide your marketing plan. Most LPG plants don’t think there’s anything they can do to promote their business. They just believe that the customers would always come into their plant to buy gas when they need to refill. As much as that could be true now, it may not be true for all time.

The main reason for marketing is competition, and without competition there will be no need for marketing. Because your customers would always find you when they really need you. But since they don’t have to choose you, then you have to find a way to make them to choose you.

The idea to increase sales for LPG plant is to go beyond the wait and see conventional sales strategy for gas plants, where the customers on their own would find the nearest plant to buy gas. I have bought cooking gas from different plants as I choose because no one gave me any reason to choose them.

But if you plan to increase sales, you don’t just seat and wait for customers to decide in their house which plant they would buy from when their gas cylinder is empty. You can help them to choose you, long before they ever need to refill their gas cylinders.

Holiday Sales Marketing

Holidays are the best times to increase sales for LPG plants. One of the benefits of holidays is that people want to spend. They have plans to spend more money and that can increase your sales normally. But that’s not always the case.

Inasmuch as people want to spend money during holidays, they don’t have to spend it on your product. If you want their money it’s up to you to strategies on how to get it. That means, as an LPG plant you have to have holiday sales plan.

It’s not enough to say my customers would buy from me. What about increasing sales during holidays? You have to see holiday season as a time to increase sales for your plant and not just to seat with the hope customers would buy from you.

The marketing strategies I’m sharing with you here would help you to plan your holiday sales better. Also, I recommend you read the following articles: How To Sell – A Simplified Guide and How Marketing Works For Beginners.

Membership Database Marketing

One of the most important form of marketing that’s being ignored by LPG plants is membership or customers database. In all the gas plants I have visited and even worked with, they never see this as important.

Most of them don’t even have the contact details of their customers. They treat everyone as a walk in customer without any relationship or attachment with the plant. You can send text and whatsapp messages to notify your customers of discounts, incentives and closures and holiday sales.

You can even send them holiday greetings during Christmas, Easter, workers day and Salah holidays. You can also send birthday reminders. People love to be celebrated. I have testified of my story, how my bank used to remind me of my birthdays until social media took over.

Recently, I learnt one of the popular LPG plants around me had a free gas day during the Covid-19 lockdown. I wasn’t aware, even though I have been buying gas from the plant. I first thought it wasn’t properly publicized or they used a different platform not targeted at their customers.

Then it occurred to me, they don’t have my contact, even if they wanted to reach me. This should be a lesson to all LPG plants to have a database of their customers. If someone ever bought cooking gas from your plant, you should have at least their phone number and cylinder KG size. Everything is tagged to phone numbers these days.

We currently implemented this for a client, and I will explain it all in the case study. I will explain how we implemented this strategy. You too can do the same, tapping into my ideas for your plant.

Mobile App Strategy

Mobile apps are changing the way we do business with our mobile phones. One of the best ways to build membership or customer database is with mobile apps. While most plant owners still argues that it’s still early to adopt such strategy, they forget that you don’t build customers overnight.

A mobile app would help you start building members database now, long before your business would become more competitive. The app can do much more than just members database profiling. It would help you increase sales for LPG plant by giving users access to order cooking gas and buy cylinders on their phones.

It may cost some money to develop an app like this but it helps plant owners increase sales through customer database management. However, an entrepreneur can also provide such marketplace for all gas plants in the country to use.

Social Media Marketing

This may not be the perfect way to increase sales for LPG plant, but it’s a way to help brand your gas plant in the mind of your target customers, and publicize your future promos like discounts.

You cannot avoid having social media presence, at least in platforms like Facebook, Instagram and Twitter. You may need to localize your social handles as well to avoid people who are not from your location joining your fan base. You don’t need your followers polarized. That would make your social media campaigns less effective.

If you have multiple plants, it will be best to either add the locations you want customers to follow you or create each handle for particular location. Don’t attempt to target everyone with your social media pages. Focus only on your target location.

Customer Delivery Services

Another strategy you can apply to increase sales for LPG plant is delivery. During the pandemic, many customers, both homes and businesses wanted to get their gas delivered to them but couldn’t find such service anywhere.

This kind of service is what is still keeping the road-side gas refill stores operational. People find them convenient when they don’t feel like going any distance to buy cooking gas. Also, in time of emergency, when gas suddenly finishes during cooking and you have no one to send to refill your gas cylinder, delivery service may be the only hope. There are customers who won’t might paying delivery charges.

Some businesses like restaurants, hotels, etcetera, would use delivery services when offered. You have to understand your customers needs then look for a common ground to provide such services in a way it will serve a purpose.

Promotional Tips For LPG Plants

I have given you some important clues as to what you should be doing about how to increase sales for LPG plant. First, I explained about location based advertising – meaning your promotion should be location based only. You target only those within your business coverage.

Secondly, i highlighted in the steps to increase sales for LPG plant database marketing and mobile apps. These two should work together to be more effective. You need an app to manage customer database. You can also collect customers data any other way or even using manual method.

But for LPG plants that deals with more customers or multiple locations, using a mobile app would of great benefit. I even advised that it would have better subscribing to an existing LPG marketplace app to save cost in developing your own app.

The real concept is how you can communicate to your customers through their most effective platform. And then, the social reach out. It’s also an avenue to promote discounts and incentives. Most importantly, it’s to brand your LPG plant business. While I also explained delivery as a value service that can increase sales for your gas plant as well.

Let’s now look at some implementation strategies, as a way you can increase sales for LPG plant:

Promote With Incentives

Incentives are most effective way to attract, motivate and encourage customers to do something. You remember the popular campaign, BUY 1 GET 1 FREE! Such incentive drives sales in a way you may not be able to control.

However, I would only advise using promo that can increase sales for LPG plant and that will not reduce your revenue.

Moreover, the only way promos work effectively is if they are amply advertised. There’s no way it works without more customers being aware of it. It doesn’t matter if you are giving out discounts or souvenirs, they are the same. If nobody hears of it, nobody will participate in it.

Offer Discount Promos

Let me start with discount sales for either all your customers or segment of your customers. You may not know how effective discounts work for sales until you try one. This kind of strategy is used a lot by supermarkets, and it works.

Once customers know they can pay less they would want to come back for more. Study and strategies on different promo discounts to help you boost sales regularly.

However, if you have been operating for up to one year, you should have noticed your high and low-peak periods. This would help you plan your discounts to either help attract new customers or increase sales from dormant customers.

With discounts nothing is done without a target. You might observe my emphasis on mobile app, it’s because to better manage promos in this age you need it. It will help you to better manage customers who benefits from those promos and for proper accountability. You don’t want discount fraud or encouraging your workers on how to steal from you.

Give Out Souvenirs

This kind of promo is usually good when you are launching your gas plant. It helps to create massive awareness around your target communities. Also, most customers would come just to get the souvenirs.

You can either give it out freely to everyone, depending on the type of souvenirs or use it to increase sales or patronage. You should use something that’s attractive and that would help promote your new plant.

For example, t-shirt or face cap can do the Magic better. While everyone would like to get this kind of souvenir, it can also help you increase patronage. You can offer the customers that buys up to 12.5kg gas quantity in one month. Not everyone would qualify but surely everyone would be talking about it.

This kind of promo would work best with mobile app, so you can collect their data as well and use it to capture your first customers. How you implement this would matter a lot.

Case Study: OBO GAS Promo

Let me say client name is OBO Gas. They wanted to implement a system to help them manage and reward customers. We launched a campaign, know your cylinder size. They campaign was to help document regular customers and to know how much gas they buy monthly.

OBO couldn’t automate the system, we used its receipt system. Customers were issued with a tally number to indicate how much kilogram of gas they have bought. Every repeat purchase gets a new tally number with current KG total.

We exchanged customers data during the first tally collection for the month, and announced winners at the beginning of each month. Top 3 customers with the highest KG purchase gets gift items. Their phone numbers, kg purchased and gift they qualified for where published and posted for everyone to see. And we took pictures for the social media campaign.

At the end of 3 months, we collected 247 customer data, and had 60% increase in return customer rate. There were challenges too, and we hope to do it even better next time.

Conclusion

If you are focused on how to increase sales for LPG plant, you will always find ways to promote your plant better. But what’s more important is how best you can reach out to target audience during your promo period. It’s important you consider the options that would give you more reach at cheaper cost.

Also, you have to know which segment of your customers you want to target with the promo and what the motive for the campaign. Whether you are using discount or souvenir, whatever incentive you agreed to use shouldn’t be wasted on the wrong target.

Finally, customer management is more important and should be part of your plan from the beginning. Managing customers is like managing your revenue source. It’s not something to take likely. And I strongly recommend to focus on phone numbers. Everyone has phone these days. If you would buy into my idea of a mobile app, contact me for how you can implement it for your gas plant.

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Grow Your Business

How to Expand Cooking Gas Business In 2021

Do you want to make billions from cooking gas business? The cooking gas business is worth over 370 billion naira and you can decide how much of the billions you can take from the business annually. Here is your tips to join the Billionaires of cooking gas plant business.

And just like we saw the making of billionaires in the petrol station business, we are about to witness the making of billionaires in cooking gas business. And it’s no mystery how it’s going to happen.

All you need to do is follow the guidelines in this free report and you will be in line to become the next billionaire of cooking gas business.

I’m not trying to persuade you but if you have followed every business trend, the first movers are the biggest gainers. Cooking gas business is booming now. If you join now you start a chance to be among the early gainers.

Take for example the early days of bitcoin, banking industry, diesel business, GSM phone business, importation business, car business, and so many other businesses that you witnessed that started in Nigeria and made the early starters richer.

Feasibility Report For Mini Cooking Gas Plant

This report will show you How to Build, Grow And Expand Your Cooking Gas Business. It’s the same strategy adopted by the billionaires of Petroleum business. And cooking gas business is huge and can be setup anywhere in Nigeria.

Part #1: Introduction To Business

If you want to be a billionaire in Nigeria, and doesn’t think it’s impossible to become a billionaire in Nigeria;I have found the business, the process and the strategy to become a billionaire in Nigeria without fail.

If you are looking for a business that have the potential to make you a billionaire, this one will do it in just five years. if you follow my advice. It’s not a get rick quick scheme and it’s not network marketing. But it’s a proven business model and product that has made billionaires in Nigeria.

And many of the billionaires started from nothing to become what they are today. Some of them it took multiple decades. But what I’m about to show you will take you just 5 years.

This is Billionaires Business

Starting a cooking gas plant is a Billionaires business. Among the four assets in life guaranteed to make you rich, oil which is a relation of gas is one of it. So, if you are in cooking gas business you are destined to be rich. You might as well start to think like a billionaire.

Let me give you the four assets that make people rich. They are called assets because their value is unlimited. They keep growing in value and multiplying in profits.

  1. Business is the first one. Your business is an asset. Once you start a business you have created an asset that can you make you rich. If you don’t have a business yet, you haven’t created an asset for your future.
  2. Real estate is the second one. All of the forms of real estate investment falls into this category. Their assets makes anyone rich.
  3. Paper – that includes stocks, bonds and mutual funds. If you are familiar with this, you will realize that the penny stocks of 10’years ago are the value stocks of today. Those who bought them in pennies and very rich today.
  4. Commodities – Gold. Silver, oil and gas. LPG or cooking gas is one of the commodities listed as assets that can make you rich. We have many of the oil billionaires in Nigeria. The same thing that happened with oil will happen with cooking gas.

See the future prospect and act now:

Now you know that this industry has potentials to make you a billionaire. If you have followed the Nigerian billionaire index, most on the people listed as billionaires in Nigeria are oil billionaires. And the fact fact Dangote is building a petrochemical industry to further increase his wealth, exposes the huge potentials in oil and gas.

Liquified Petroleum gas (LPG), popularly known as cooking gas currently has an annual consumption value of 55.5 billion naira. That is just a current consumption rate of just 15 percent of its full value. That means that the industry has a potential of an estimated annual consumption value of 370 billion naira, and can be more.

This is by far one of the largest market potential in the country. And I’m going to show you how you can become a billionaire in cooking gas business.

READ ALSO: How To Start 3 Cooking Gas Businesses In Nigeria

How Billionaires Build Business

If you are going to make this idea work for you, you need to understand how billionaires build their business. They use other people’s money. But you can’t just get other people’s money if you don’t think like the billionaires.

I know of the complain that banks don’t give loan. But of course banks shouldn’t give loan to someone who haven’t proved they can pay back. Every billionaire you see, was once refused loan by banks.

Here is how they did it and got all the money they needed. They first got their business working. And leverage on the success of that business to get money from banks for expansion. Banks would easily give you money for expansion but not usually money to startup.

And they would need proof of payback. If you can’t prove you are capable of paying back, you don’t even deserve the loan in the first place. And don’t criticize the banks, they are in business too. If you were them, you would do the same. You won’t give someone money who’s not sure of paying back.

Gas Billionaires Secret Plan

Every billionaire plan has hidden investments in all their businesses. If you know the business strategy of McDonald’s, you will understand what I’m saying. The owner of McDonald’s built one of the largest real estate investment in the United States while creating restaurant chain.

You must identify your secret investment in your cooking gas business. That’s what gives you leverage beyond the value of cooking gas sales. And it keep growing and appreciating in value overtime.

Imagine prime locations in major cities in Nigeria. The value alone over a decade would be worth more than your entire investment in cooking gas business. And that’s what gives your investment strategy a fail-proof cover.

A choice property you bought now might be worth ten times more in a decade from now. Even if your loan fails, you can pay off your debt with less than half of your real estate investment and still have more than half remaining.

You create value out of your loan plan by setting up on choice properties.

Plan For Startup Funds

You biggest secret is in how you intend to finance your billion naira cooking gas business. To startup a billion naira company would require proper financing. You can’t make billions from kobo investment. You have to invest in the billions too.

So, where is the money going to come from? You have to figure it out from the beginning. Don’t assume when you get to the bridge you will cross it. That’s a disaster going somewhere to happen.

You have to plan how you are going to get the money that you require to build your billion naira cooking gas business. If you can’t figure it out, you can’t build the business. There is nothing like luck here. No billionaire achieved success by luck. They have the plan all set out from the beginning.

At least, you must know how to get your seed capital to setup your initial cooking gas plant. And then with a carefully laid out plan on how you will get the rest of the money to roll out more gas plants.

If that is not done, don’t waste people’s time on your dream. Being a billionaire is not by trial and error. You can do that to hit your millions but not when it’s for billions. And that’s why there are not many billionaires in the world.

Part #2: Getting Started In Billions

As a billionaire cooking gas investor, the first thing on getting started is to plan how many network of cooking gas plants you intend to setup? That means you have to put up a powerful business plan as your road map to becoming a cooking gas billionaire.

That is your first step in getting started with your cooking gas business. You cannot compromise on it. Without a proper business plan you cannot even boast of a good cooking gas plant, not to talk of becoming a billionaire in it.

And beyond having a business plan, you have to adopt a business model. How the business behaves and operates would define the brand and attracts like-minds. You should give the business a direction from day one.

Write a Business Plan

A billionaire cooking gas business plan must be ambitious and very comprehensive. You can hire a professional with experience in cooking gas business to package it. And it should be different from the general business plan circulating online for 20k. A proper cooking gas business plan should have a comprehensive location assessment report for the target location you want to setup the plant and customized to your business.

Let it evaluate deep into the business image, branding, expansion strategies, building strong customer base as against just promoting the business, with a business model that sets you apart from the competition.

Also, one of the basic reason for a business plan is the structure of the business. You need to set the structure, functions, responsibilities, hierarchies, and reporting. The business should have a workplace culture that instill discipline, proper leadership, renumeration, and career growth.

You need a mega business plan. You will need this plan to secure loans or capital from investors. But it’s important that investors see your ambitious project from the beginning. They like big dreamers who can prove they are not afraid to get it done.

There are so many businesses that have big plans, but when you show capability to deliver on your ambition, you easily win investors heart. But don’t make the mistake of seeking for investors when you haven’t proven your dream is viable.

READ ALSO: How To Package A Cooking Gas Business Plan

Building The Business

Once you have a business plan designed for your billionaire project, then it’s time to start building the business. The startup requirements and financial inclusion for the business must have been defined in your business plan.

Identify the requirements you can start doing first while you work on the others. If you have the required capital to startup immediately, good. But if not, start the process to source for funds from sources accessible to you.

The business of cooking gas plant is not a one day business. Don’t expect to do it all in one day. You might as well advise yourself to be patient. It’s okay to experience some delay but don’t loose your focus.

And if you are entirely new in this industry, I recommend that you hire a consultant or get some mentors. Although, getting a mentor in cooking gas business may not be an easy one but you can get a consultant to help you at this point.

You must set the motion for your ambitious dream with your first cooking gas plant. It’s your pilot project. It has to be the right model of your entire business. Your key model most be seen implemented in this first project.

Here are things to focus on to get it right the first time:

A) Finance
B) Location
C) Branding
D) Plant Design

Let me explain the last one here, design. It’s part of your branding. But it’s more critical part of your branding. If you noticed, the banks use a particular building design. It makes it easier to identify a particular bank even if their name is erased from the building.

Use the same strategy. Don’t try to be like the other gas plants. Create a model design and brand it in your colors. That’s why I will always advise that you use a good contractor to build your gas plant.

Training & Retraining

One of the keys to a successful business is training. And to build a world class billion naira cooking gas business would require proper training and retraining of yourself and the workforce.

Cooking gas is a huge business proposition on its own. It’s a global business with successful companies all over the world your can learn from their success stories. You can also travel to experience what is obtainable in other countries and replicate such here.

The vision, mission and purpose of the business must be religiously communicated to the workforce. Also, structures, workflow, responsibilities, reporting and promotions must form part of the consciousness of the workforce.

If the people are trained to do the job, they will do it much better with great results. They will be aware of their relevance and contributions to the business. And if you instill good brand culture, people’s interests are protected and good efforts are properly rewarded.

Adopt a Business Model

One of the ways to ensure your business operates in the same way and structure is to define your business model. The structure and operation of your business must be unified and centralized for proper monitoring.

Once you are operating more than one cooking gas plant, you need your own model that would power the operations of the business. And because you are a brand, you need to make your business enticing to both customers and employee.

Think about the UBER business model. It was created to operate taxi globally by UBER without ownership of the taxis or the drivers. UBER owns the customers and shares that with the drivers. And today, UBER is the biggest taxi company in the world.

You can create your own model for your cooking gas business. Think deep and develop something world class. The successful billionaires doesn’t always go with the norm. The break the norm to create the unusual. And the unusual always win.

The people who work for you must understand how the business does its things. They must understand the company’s culture, style and approach to service delivery. And most importantly employees must see how their future and growth is protected in the organizational structure of the company.

Create a Global Brand

A cooking gas brand would set you apart from the competition. Having a brand is more than just having a name for your cooking gas plant and writing it all over your gas plant. You have to consciously build a brand with a global concept.

Cooking gas business is a global business. It’s a product that is consumed all over the world. And especially in Africa where the demand and consumption is still growing. The potential to expand your cooking gas business beyond the shores of Nigeria is likely.

Follow all the process of building a brand. Get brand managers to handle this aspect for you. It may not be something you may be able to finance from inception, but you shouldn’t take it off your sight from the beginning.

Once you build a brand appeal like Total, Oando, Dangote and the rest, you will be amazed how that would add value to your business, gives you unrestricted access to funds from banks and financial institutions for your expansion.

Having a brand is your secret to expanding your cooking gas business. If you want to become a cooking gas billionaire, you must build a brand for your business that will be recognized, accepted and respected.

Part #3: Setup Your Gas Plant

Once you have opened a business and setup it’s structure, the next thing would be to start planning for your first cooking gas plant. You need to learn all you need to know about starting a cooking gas plant business.

Don’t take anything for granted. A business with a huge potential of making you a billionaire would not happen by accident. Everything that should make your business a success should be followed religiously.

Remember that the focus is to build a business with billion naira potential. One cooking gas plant won’t do it for you. But setting up the first gas plant is key to achieving your billionaire’s dream.

Here are the steps to guide you in achieving your dream successfully.

Conduct A Feasibility Study

A feasibility study is important when setting up a cooking gas business. Apart from marketing which is one of the key success point in cooking gas business, the other and most important aspect is the location.

Cooking gas business is a location based business. If you get the location wrong the business won’t be successful. You have to pay close attention to everything that needs to be done to achieve a better location for your cooking gas business.

And the best way to ensure the location is suitable is not by assumption but by conducting a feasibility study. This study will look into the potential of the business in your chosen location and identify key points that would drive success or cause failure for the business in that location.

It will also identify the possibility of sales and estimated volume possible and what could be responsible for it. And with this report you can choose the right spot that would be suitable to site your cooking gas plant.

Your viability report is also a key asset when looking for a loan. Investors and banks alike love to see the viability of your business location. The banks understand location. Once you have prime locations for your business, banks understand your ambition and believes in your success.

Finding The Money

Money is a very important requirement when starting g a business. The Role of money is to get things done and to amplify what’s already happening. And for this billionaire cooking gas business, you will be needing lots of money.

If you don’t know how to raise money just forget about this dream right here now. This idea is not for those looking for business they can start with little capital. There is nothing little about starting a cooking gas plant, especially when you want to build it into a billion naira investment.

However, your first call is to find your seed capital. It’s the most difficult of them all but it’s your secret to landing more money and attracting investors. Although, there are other tricks you can also apply but they are just good at helping you if you already have a solid proof of your dream possibilities.

Your initial gas plant can be used as collateral for loan to setup more gas plants. And the more gas plants you build you can further collaterize them to get more loans. Although, this might be risky but thats what business is, a risk venture.

Finding Your Initial Capital

This might be a challenge for some startups. It’s not always that easy to get initial funding from banks and investors in Nigeria. But that should not stop you from trying. There are startup funds available from The Bank Of Industry. You can explore this opportunity.

Although, it’s usually possible when you have a collateral for the loan. Most financial institutions will not grant loan without collateral. Alternatively you can use the cooking gas plant equipment as the collateral for the loan. Some banks can give you equipment financing loan to buy the gas plant.

And if that’s the case, you will need to have a land for the gas plant and a professionally written cooking business plan for the loan request. Once you can convince the bank to give you the money you ask for with evidence to prove what the funds are meant for and how you are capable of paying bank or maybe a backup for payment failure, then you have yourself a loan to finance your project.

But don’t ever make a mistake of not adequately preparing yourself for the loan request. Get first hand information on the modus operandi of the financial institution you are desiring to request your loan from. With that information, a well written business plan and verified collateral, you are good for the loan request.

Finding a Location

Your feasibility report is your compass to finding the best location within the city to site your cooking gas plant. Although, it still needs to meet all regulatory requirements before it can be approved. But knowing where the business would be better sited would help you make the most important decision about your cooking gas business.

Think like mega petrol filling stations owners. They only site on major roads and busy locations. You don’t site a mega station in an obscure location. That should be the mentality for your location choices. The only difference between you and the mega stations is that you won’t need as much lands as they occupy. And you won’t need to invest as much money as they did.

All that you require is to locate in prime areas of the cities and attract high volume cooking gas customers to your gas plant. But you must also put the cost of acquiring those location as a major cost implication. In fact, it should be the largest chunk of your financial requirement.

And you need to get the exact land size for your cooking gas plant. The Directorate of Petroleum Resources also have stipulated land sizes for cooking gas plants. You need to know what land size applies to your cooking gas plant. You need to know that the 100 by 100 square feet is minimum. If your gas plant business model is 20 to 40 MT size you should consider a bigger land size to accommodate the big tanks, give you more operational space and for car parking.

But your location is key in making billions from cooking gas business. If you make mistake of using lowly patronized areas, you will have a cooking gas plant but not the billionaire cooking gas plant. Also, a good location is equally a good collateral for loan applications.

Getting Government Approvals

Another important part of starting a cooking gas business is getting the required regulatory approvals. Cooking gas business is regulated by the Directorate of Petroleum Resources (DPR). The same agency that regulates petrol products and stations.

They also have standard regulatory requirements for setting up a cooking gas plant. You can find this document on their website to help you understand the requirements in details.

You also need to understand what their requirement is about locating a cooking gas plant. It will help you to avoid making an investment in a location that would later be rejected by the regulatory body.

Also, you have to ensure you help speed up the approvals. Your non compliance to DPR requirements can slow down the approvals. And DPR have standard 6 months period for approval. If you are the only one that can delay it beyond this 6 months period.

And there are things you can do to follow DPR requirements judiciously. One is by using experienced technical partners to build your cooking gas plant. Not locating around another existing cooking gas plant. You should give at least 2km stretch from another plant.

You can find DPR approval requirement guideline HERE to download.

Installing Cooking Gas Tank Plant

If you are approved by DPR, which actually happens in stages. You will be given the first approval, which is approval to construct. This happens after they approve your location as suitable for cooking gas plant.

When that happens, you can begin the construction and installation of your cooking gas plant. And when the building, installing and testing are completed, the agency will still come back to confirm and conduct their own tests before you can be issued the final approval to commence cooking gas business.

However, apart from finding and using a choice location for your cooking gas plant and offsetting the cost of DPR approvals, which can run into millions of naira, your next major cost is the cooking gas tank.

Depending on the size of cooking gas tank you plan to setup, the cost varies. If your model is to setup mini cooking gas plants, then you should be looking at between N4 million and N8 million for a tank range from 2.5 metric tonnes to 5 metric tonnes. These are size range for mini cooking gas plants.

But if you plan to build a mega gas plant, then you should be looking at 10 metric tonnes to 20 metric tonnes. And your cost should be in the neighborhood of N17 million to N26 million.

This kind of model that would work best should be determined by your target market. Decide if you want to use the twin 2.5MT or single 5MT gas tank.

But since your primary target is prime location, using a 10MT or 20MT would need up to 2 plots or more lands. Plan your setup cost properly but don’t ever make a wrong decision with location or your target market.

READ THIS: A Complete Beginners Guide To Starting Cooking Gas Plant

Build A Customer Base

In every business, customers are the most important part of your success journey. How you win more customers, serve and retain them are critical to your success. You have to upgrade from the normal cooking gas business model to something that’s more customer centric.

Building a powerful customer base would take a lot of effort for a cooking gas plant but it’s worth it. Endearing yourself to the customers in the community or area where you are setup wouldn’t come so easy.

There are important approach your can take to implement a customer centric cooking gas plant. Although, a proper idea contemplation, planning and execution would require the professional guidance of a consultant. For example, conduction a census like to know your customer would give you a deep insight into the huge potential of your immediate customer base.

And many more ideas that would help you explore your market and build a reliable and customer friendly business that’s capable of keeping you above the competition and making your cooking gas plant more profitable. They are better handled by your consultant and making them more unique to your business.

Part #4: Expanding Your Gas Business

If this idea would work, you will need capital to finance it. You must also know that if you are going it big with cooking gas business, you must be ready to invest big too. It’s not a meager project and you shouldn’t be thinking like a poor investor.

For instance, buying a mega spot location won’t be cheap. If you want to think like the mega petrol station owners, you have to invest big on your Locations. Prime locations in every city is not cheap.

The cost of location would become the major capital requirement now and not the cost of gas plant installation. If your model is to use the twin or single 5MT gas tanks, you already know the cost. And the cost is already fixed. But the cost of location would depend on city and the area of choice.

Growing Your Capital

So, your capital is important in building a billionaire cooking gas business. Imagine if it cost you an average N45 million to setup one cooking gas plant; that means it would cost you N450 million to setup just 10 of the gas plants. And if your target is 100 gas plants that would cost you N4.5 billion investment.

You will need to grow your capital. But finding money for this kind of project won’t be that easy. There are risks to take, but the gain is equally huge. It has a lot to do with your first and second gas plants.

You must know that the most difficult of them all is starting the first gas plant. Once you scale through with the first, then it’s a lot easier to go for the second gas plant. That’s why starting in a profitable location is key.

And if you follow my counsel on building a brand first, you can leverage on that to seek for investment capital or outrightly go for a loan from the banks. If your cash flow is very good with the first cooking gas plant, any bank would be willing to give you huge loan. Although they might ask for your gas plant as collateral.

Loan Options for Cooking Gas Business

You may have a problem getting a loan for the first cooking gas plant. But you won’t have any problem getting investors or banks to loan you money for the second plant. However, I will advise that you run the first one at least for a minimum of 1 years before seeking for any investor or bank for money.

This would give you verifiable cash flow report to present to an investor or bank as evidence or ability to pay back the loan and a clear idea of what you can do with more cooking gas plant.

It’s also possible to get the Bank of Industry to fund your expansion drive. It’s usually easier to get money from any source for expansion than startup. A startup is a risky venture. But an expansion drive is less risky because they can see your operational report for a period of time.

But don’t make a mistake of going for just any amount. Go for an amount that covers the entire cost of setting up a new plant.

Finding New Locations

Once you have become successful with one location, the next step is to start identifying more locations for new setups. The best way to target the market is to create a map for your expansion drive. You don’t have to become an artist. Just make a list of locations within your target market.

Your location map should start with either local government areas in the state of operation or different communities in your state or even the same local government area, and major roads in each location as your target. If you are targeting the whole country, then start with more profitable locations across the country.

Also, you may need to travel a lot to these locations or hire a consultant to find you profitable locations. You can make it cheaper paying a consultant for this job by using estate agents to find the locations and hire a consultant to conduct viability assessment for them before you buy.

This way, you can get a viable location each time. Remember, it will cost you some money doing it this way but it’s worth the investment. It’s better to have a profitable location than discover later that it’s not viable after investing millions.

FURTHER READING: How To Pick Most Viable Location For Cooking Gas Plant

Setting Up More Cooking Gas Plants

Once you have your location plan setup, it’s time to start building more cooking gas plants. That means repeating the steps already outlined in this special report. There may be some to jump in the process, because you can only do them once. But the rest you have to repeat where necessary.

The key points among them is finding the right location for your new cooking gas plant. This process must always be followed by a location access report. You may use the same business plan and simply update it for each of your new location. But the one of locate viability assessment, don’t ever miss doing the assessment for each of the new locations.

So, the number of the gas plants you hope to setup is now your driving force. In my assessment, to become a billionaire of cooking gas plant business you will need to drive revenue in the billions annually. And depending on your average revenue per plant, you will set your number of plants to build.

Conclusion

The cooking gas business will make more billionaires as we already have from the petroleum side of the sector. The stage is being set for the new billionaires of cooking gas plant business to begin to emerge. And it won’t take time before we begin to see them take their place in the industry.

Don’t ever be discouraged by the seeming sprouting of cooking gas plants around us. Even if you didn’t build them yourself, you can buy them over and add them to your many cooking gas plants. If you set your motivation right, you will see the kind of results you seek.

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