If you want to Revive your LPG plant, whether it’s abandoned, refurbished, unprofitable, reacquired or poorly managed, I will show you how best to revamp it and make it very successful again.
Reviving existing LPG plant cannot be a one size fits all plan. You have to treat each plant based on the nature of its current state and what you want to achieve. But one thing can be constant here, if you follow the right process you will get the best result in no time.
However, having a professional LPG consultant to work with would help along the way. It can be cheaper to just seek advise of a consultant and pay him for advising – while you do it yourself. That’s if you cannot afford to pay a consultant for a full service.
But if you can afford it, using a consultant to do the planning, implementation and restarting of the plant might just be the best strategy – especially if the plant is a large one.
Whatever you choose to do is fine as long as you get the desired results. So, let’s get started on the guidelines.
✅ Why Do You Want To Revive Your LPG Plant?
To start solving the problem, you have to first identify the problem. I mentioned some reasons you might want to Revive your LPG plant. It’s important you identify which one your plant falls into. Here’s the list again:
These five reasons are common for those reviving their LPG plant. Each of the reasons may require different approach to Revive it. The reason for reviving the plant will determine your approach to revamping it.
What if you have more than one reason in the list here that applies to your plant? Let’s see how this reasons play out and what are your possible solutions.
✅ Reviving Abandoned LPG Plant
Before you start reviving an abandoned LPG plant, understanding why it was abandoned would help a lot. There are several reasons anyone could have abandoned a business.
Moreover, no one abandons a successful business unless it’s in a dispute situation. Any other reason is worth investigating. Well, assuming you were not the one that abandoned it.
What to do in this case to Revive your LPG plant that’s abandoned it to take a look at the level of decay in the facility and start with cleaning out the debris to reveal what beauty is till remaining of it. It’s at this point you can take stock of what’s in working condition and what needs to be fixed or replaced entirely.
Fixing up the plant is basically what’s needed first before any other considered problems fixable. But you should be aware of all the problems before attempting any fixes at all. You may also need to update its trading licensing with DPR.
✅ Reviving Unprofitable LPG Plant
A plant that’s unprofitable is a very delicate one to Revive. You don’t just treat it like an abandoned plant. Before you think of fixing it up, the most ideal thing to do is explore what make its unprofitable in the first place.
🔹️How many KG of gas does it sell daily, weekly, monthly or yearly should be reviewed. If sales are low is a tale sign that more work needs to be done.
🔹️Review its location as well to ensure its targeting the right audience. Location do have a lot to do with LPG plant profit potential.
🔹️It can also be Management issue. And Management can comprise of several component both visible and invisible (LOL). Who manages the plant is as important as well.
🔹️Finally, supply could also be a reason its unprofitable. A bad supply schedule can affect a plant. If it constantly doesn’t have supply, it discourages customers and soon enough they start going to the competitor to buy.
If the issue is just with location, you can easily decide on a new one. Although the cost may be huge moving a plant to a new location. It’s like starting out completely new. Any other issue identified can simply be addressed with appropriate solution.
✅ Reviving Poorly Managed LPG Plant
Its sometimes difficult to classify a plant problem as being poorly managed, especially if the owner is the manager. Sadly, that’s the number one reason most plants are not profitable.
It starts from setup stage. The setup was poorly done. They were inexperienced but they never sort professional guidance mostly because they taught the consultant was asking for too much.
If you consider how much and years lost, you would have paid the little fee the consultant asked from you. However, the best solution for poorly managed plant is to identify the immediate management error before preferring any solution.
It could also involve changing the management. Surprisingly, most plants are being run by inexperienced people. Hire a professional or get a consultant to be a behind the scene manager. The fee is not much and it can be monthly or on retainer-ship.
✅ Reviving Reacquired LPG Plant
This one is not easy as well. Unless the plant is at optimal profit level – which is usually not the case, because no one would sell a very profitable business unless the offer was irresistible.
So, when you acquire an LPG plant, whatever condition you may think it’s the current state, always do some assessments. Review it’s market potential and opportunities. Examine its turnover, Cashflow and supply rate.
Check what the former owners were doing and review what more can be done to improve the profit status. If possible interview the former own and learn of their challenges and what they felt they could have done differently.
✅ Reviving Refurbished LPG Plant
I like this one the most because it’s less challenging. Any plant can do this at different time of their lifespan. It’s always good to have a refurbishing plan – like every year or after every two years.
You need to keep the plant shining and looking attractive. It doesn’t necessary have to be only old and abandoned plant that require refurbishing. If the plant paint starts looking dirty and you start noticing facility decay, it’s time to think of refurbishing.
Don’t forget that people like new things. Customers are attracted to new and good things. Any little improvement will excite your customers and probably bring back old customers.
Don’t watch the investment go down without a fight to Revive your LPG plant. But don’t go about it the wrong way. It’s better to use the services of a consultant to achieve a better result than making the same mistakes doing it yourself.
However, if you had past experience about running an LPG plant and you think you know what you should fix that’s okay too.
My advise to do it yourself is to apply what works for you. Understand the problem first before attempting any fixes. Moreover, doing it yourself doesn’t mean you don’t need a consultant as adviser. Always be willing to pay someone who understands better to help you.
If you use cooking gas at home, you need to be safety conscious to prevent gas explosion. It’s not because using gas at home is that risky, but your negligence can put your home at risk. There are known causes of gas explosion at home, and most of it are caused by human negligence.
Cooking gas (LPG) is clean energy. It’s safe to use in homes that’s why it’s used as cooking gas. There’s really nothing to be afraid of with using cooking gas at home. Most of what people are concerned about are based on fear-theories.
For most reasons, cooking gas is safer and more efficient than kerosene or even wood. However, the causes of gas Explosion is gas leak. If there’s no gas leak, there won’t be any gas Explosion. Therefore, to prevent gas leak, the right safety checks should be followed, and it’s easy and simply to follow.
✅ Tips to Prevent Gas Explosion
When cooking at home with gas (LPG), you need to know your safety rules. It’s important you don’t operate in fear, as against having the right knowledge about cooking gas safety procedures.
Being afraid of cooking gas Explosion is unnecessary. There are known reasons gas can explode in your home. And the root cause is 100% preventable. If you can prevent gas Explosion at home, you shouldn’t be afraid of your safety.
So, you should expose yourself to understanding what causes it and how to prevent it from ever happening around you.
✅ The Nature of Cooking Gas
The very known challenge of cooking gas is in its gas nature. Gas is invincible. It’s difficult to detect the flow of a gas in the atmosphere. The only ways to detect the presence of gas in your home atmosphere is if it’s strong enough to irritate your nose and eyes – or you could perceive the odor.
Naturally, cooking gas is odorless. It doesn’t smell or have smell that can be easily detected. That’s why one of it’s recommended production process is to add ethanol in cooking gas to give it a distinct odor that can be easily detected in the case of a leak.
However, some marketers still ignore this requirement and sell gas without the inclusion of ethanol. Although, the cost of gas which contains ethanol is costlier than those without ethanol. But with the lack of consumer awareness, marketers buy the cheaper option and still sale at the highest price possible.
✅ Main Cause of Gas Explosion
Gas explosions don’t just happen. It’s not a regular occurrence. You shouldn’t be scared about using gas at home. In fact, cooking gas is one of the fastest and safest cooking fuel.
If it’s not so, it won’t have been adopted all around the world as a global means of cooking. Also, note that the only major risk associated with cooking gas (LPG as liquify petroleum gas) is fire.
And cooking gas is not the only thing that can cause fire in the home. So, let’s isolate the real problem and show you both how it’s caused and how it can be prevented from ever happening at all.
Let us examine cooking gas and the remote possibility of gas Explosion. The only thing that can cause gas Explosion at home is gas leak. So, it’s only one problem you have to deal with. And it’s also very easy to prevent – which is to avoid gas leak.
However, not all gas leaks can cause explosion. The same way that not all explosions at home are caused by gas.
✅ Steps to Prevent Gas Explosion
The idea that you can be responsible for your own safety at home should excite you. It means that things can’t just happen by chance around you. If you put these safety checks in place, then it will be impossible for gas Explosion to ever occur in your home.
Have you not imagine why one of the safety recommendations for using cooking gas at home was never to buy fire extinguisher. But this requirements are placed in public buildings as safety rule. That’s because it’s actually easier to deal with gas leaks from a Cylinder without the aid of fire extinguisher.
Here are your best steps to preventing gas explosion in your home:
Buy only Ethanol base cooking gas
Avoid cheap and inferior gas cylinders
Test your Cylinder when due
Change your gas regulator or burner frequently
Always replace the rubber on your Cylinder head
Stop using the Cylinder once you could smell gas
Fix any suspected leaks immediately
Keep your Cylinder in a safe and airy spot
✅ Buy Only Ethanol Base Cooking Gas
Ethanol is required in gas to give it odor. Naturally cooking gas (LPG) is odorless. It can leak without detection. But the addition of ethanol adds odor to gas and help prevent undetected leaks.
You should constantly ask for cooking gas that has ethanol when buying gas at your Refill plant. Also, gas plants can take advantage of this to offer ethanol based cooking gas as a competitive edge.
✅ Avoid Cheap & Inferior Gas Cylinders
Cylinders are the best storage for gas at home. When buying cylinders, buy original ones for your safety. Avoid cheap and inferior cylinders. That the Cylinder is cheap against recommended brands should discourage you from buying it.
You should not put the safety of your family at risk for a cheaper price of Cylinder. Always buy known and durable brands. Unless your life is cheap then you can buy cheap cylinders.
Substandard Cylinder are more likely to leak easily or cause explosion, due to their poor and easily corrosive material they are made of. Most of these cheap cylinders are from china, being imported by unreasonable importers.
✅ Test Your Cylinder When Due
Not many people knew that their Cylinder can expire. And once it has expired it can constitute a danger in your home. Although, the due date of a Cylinder doesn’t necessary mean expiring date. It’s a reminder for you to test your Cylinder to confirm its continuous usage date. It’s better to know when your Cylinder is no longer usable than risk Explosion in your home.
Moreover, gas plants should also be able to physically detect bad cylinders to seize and remove them from usage. Such cylinders can also endanger the plant and the owners home. As gas pressure can cause a bad Cylinder to explode – if the Cylinder is already weak and corrosive.
You can see this test date written on the body of your Cylinder. This date starts with A,B,C and D alphabets, and followed by 2 digit numbers like in this example (B-23). The 2 digits represent the year, while the alphabets represent quarters in a year. This date is marked on one of the sides collars of your Cylinder.
However, you need to understand what the alphabets stand for. Here’s how to read the date:
A – First Quarter (Jan-Mar)
B – Second Quarter (Apr-Jun)
C – Third Quarter (Jul-Sep)
D – Fourth Quarter (Oct-Dec)
Therefore, B-23 means your Cylinder due date for usability testing is by 2nd quarter of 2023. You should submit the Cylinder for testing at any of the gas plant closer to you. The tests are done free of charge at the gas plants.
✅ Change Your Gas Regulator or Burner Frequently
One other safety precaution to take is regarding your gas regulator or burner – if you are using camp gas cylinders. You have to check and replace these accessories regularly.
These gas accessories wear out with time. And it can cause gas leakage. It’s important that you check them and replace them. Avoid trying to manage them once you notice some wear and tear.
The burners being sold in the market now are easily corrosive and can leak gas if not replaced regularly. Other accessory you should consider changing often is the hose and clips. The hose can tear and causes leak. And should be changed at least once a year.
Also, if you keep your Cylinder outside of the house, always watch to ensure the hose has not been sabotaged or broken due to effects of weather condition.
✅ Regularly Replace Cylinder Head & Rubber
Not many people know that the head of your Cylinder needs replacement once in a while. Gas can leak from the Cylinder head undetected. You should regularly check the head to ensure it doesn’t have leakage.
Also, for those using regulator type cylinders, these a rubber usually inserted inside the Cylinder head. This rubber should be changed each time you go for gas Refill. This rubber helps to hold your regulator firmly and easily thin out due to pressure.
These simple but easily ignore safety checks are major causes of gas leaks at home.
✅ Fix Any Suspected Leak Immediately
Gas leak of any form shouldn’t be ignored. Once you notice any leak, take action immediately. It doesn’t matter when you noticed a gas leak, even if you are cooking, sto͏p immediately and switch off the gas cooker.
If you use ethanol based cooking gas the odor will help you notice easily if there’s leakage. But place priority on safety always when using cooking gas.
✅ Keep Your Cylinder in a Safe & Airy Spot
Safe keeping or location of your Cylinder in your home is equally important. Ventilation is important when using gas at home. If the house or kitchen is stuffy, it’s not safe to store your Cylinder there.
Make sure the Cylinder is kept in an airy place in the house. If you are the only one occupying the compound, or if the environment is safe without errant children, you may consider keeping the Cylinder outside of the house.
Air helps to dilute gas in a case of leakage. The air absorbs the gas and reduces the impact even if there is Explosion or fire. And if you store the Cylinder inside, when you notice gas leak, quickly open all the ventilation – like doors and windows to allow the gas to flow out. And avoid using naked light at this point, until you can confirm that the presence of gas has completely evaporated.
Gas leak, fire or explosion at home doesn’t happen too easily. And the possibility of gas Explosion at home can be prevented from ever happening at all by keeping to these safety measures.
There’s nothing really to be afraid of with using cooking gas at home. Cooking gas is a clean and safe energy when used as directed. And if you follow these safety guide you will never have to worry about gas exploding in your home.
Finally, most of the causes of gas Explosion is man made errors. In Nigeria, we can be negligent sometimes – mostly dues to lack of funds. People tend to manage bad equipment because they cannot afford to replace them. But never do that with your cooking gas equipment.
Do you want to know the cost of setting up LPG plant in Nigeria that can be ‘insanely’ profitable, because people can’t STOP cooking food? Here is your best startup plug for starting, selling and managing a profitable cooking gas plant in Nigeria.
I’m going to show you all about this business, how you can start it, how you can even start small; and how to start it profitably. How best to deal with competitors who may be stronger than you. And most importantly, how to raise money for your cooking gas plant.
Above all, cooking gas plant or LPG plant is very lucrative. But do you know what makes it that profitable? Most people jump into the business because they believe there’s high demand for cooking gas – which is true.
Also, that means you are not the only one who sees this huge potential. You need to prepare well. How do you plan to deal with competitions? That’s why it’s important you conduct proper study on your location before you setup. Your location determines the success of your cooking gas plant by 75%. The remaining 25% is shared by marketing and capacity.
Don’t work on assumption about your location. By conducting proper location assessment, you will be able to address the issues of patronage, market concentration, potential new markets and identify competitors both present and future incoming.
Now, if you are about to setup a cooking gas plant, study this document thoroughly and contact me if you need more guidance. (My contact detail is at the end).
✅ Is LPG Plant A Good Investment Option?
Generally speaking, most people desiring to start cooking gas plant always desire to know if it’s lucrative. Well, I will leave you to decide, but see why you may have to consider LPG plant business.
If you want to start your own business
And if you are looking for a highly profitable investment
If you are looking for a business that’s easy to setup
If you want a business with low operational cost
Plus, plants can be located closer to LPG customers
However, considering that gas is now the cooking energy of choice, that makes it a necessary consumer product. Most households now cook with gas cooker. And many more are joining in the use of gas for cooking. The demand is skyrocketing, making the business even more lucrative.
✅ What’s LPG Plant Startup Plan?
Moreover, before you can start a cooking gas plant, you need to have a startup plan. Here are the things you should list out in your startup plan. So, take it like your own LPG plant to-do-list.
How to raise the money to start
Where to setup your gas plant?
What it would take to get government approvals?
What’s the potential customer value in your chosen location?
How to deal with stronger competitors in your location
How to guarantee profitability in both short and long run
It’s always important to think and plan ahead. Most times startups are only concerned about how much it would cost to setup. That’s just one part of your problem. 95 percent of investors interested in cooking plant business can’t afford it from their pockets.
So, the right question you should be asking yourself is not how much, but how do you raise the money to start? If you can answer that, you can now ask yourself how much do I really need to raise?
✅ How to Raise Money for LPG Plant
Big projects like LPG plantis not one you should be considering starting from your personal income. The best options would be to get a financial partner or get funding from the bank. CBN has allocated funds to help finance startups in the energy sector, of which LPG plant is a part of. And this money is readily available if you request for it.
Contrary to what many think, banks and financial institutions can give you loan to setup LPG plant without knowing anybody in the bank. In case you don’t know, CBN made provision for loans for oil and gas businesses, which you can assess through the banks.
Also, you can approach your bank to finance the purchase of your gas plant equipment or give you operating capital. This kind of loans are easily accessible. To do that successfully, you will need the following to apply for it.
A business plan to describe your business and how you intend to pay back the loan
Collateral or land documents owned by you or one of your partners in the business
Pro-forma invoice detailing the product you required financing and the cost
Note that this kind of financing may require the bank making the purchase themselves on your behalf to ensure the money isn’t diverted for other uses. The equipment can also serve as part of the collateral.
✅ What You Need to Start LPG Plant
Let me break some things down for you. The things you need to start are what would make you succeed or fail. Here are what you are going to do to help you start cheaper and build it to be profitable.
Process Implementation and data analysis
Following Regulatory procedures and approvals
Site cost analysis, safety and construction
Equipment planning and purchase
LPG supply partners, logistics and costs
Employment plan and management
✅ Process Implementation & Data Analysis
There’s time to plan and there’s time to implement what has been planned. If you noticed, when I talked about what should be in your startup plan, I expect you to have a plan of what you intend to do. For example, to raise money for the plant you need to convince partners and financial institutions.
What are the processes you need to put in place to get the money you require? How do you convince a third party that the business is viable, and that you have the right expertise to get it started. Don’t just think anybody will give you money simply based on the business profitability alone.
Every business is profitable, but how do you prove that you can do it profitably? That’s the point, and that’s the reason for process Implementation and data analysis. You want the potential investors or financial institutions to see your ability to make the idea profitable.
You will need to do the following:
Hire a consultant to be in your team and overseas your startup operation
Package a professional business plan with proper feasibility/viability report, which should include a physical location assessment study
If the bank or investor sees you have an experienced consultant in your team they will believe you have the right expertise to guide you profitably. That would mean their money will be safe. Hiring a consultant doesn’t mean making him a board member of your company. It’s the same way you hire a company lawyer. You can pay monthly, or sign a fixed contract.
A business plan describes what you want to do, how you want to do it, and with what you need to do – either to explain to interested investor or lender or simply to guide you in what you are building. This kind of document must be professionally done. Investors are not fools. They would see a poorly packaged plan as inefficiency on your part.
Also, your business plan would need a proper location assessment report. Any wise investor or lender would appreciate good data analysis. If you can provide factual analysis of the target market, and not assumptions, it will help them trust you more and invest with you.
✅ Planning Against LPG Plant Competitors
The biggest challenge in this business is competition. As a lucrative business, more people will eventually invest into it. Just like we have Petrol stations and mega Petrol stations, the gas competition will soon become stiff.
If you are starting small, you have to plan how to fight these kind of oppressing competitors before they even arrive near you.
Here are tips to apply during and after startup:
Setup in the best location in your target market
Create room for expansion even while you start small
Understand your target market better. Know your saturated areas, growing areas, and areas already covered by your competitors.
Conduct a location assessment to identify different parts of your market and how competitors can possibly intrude to offset you.
✅ LPG Plant Regulatory Procedures & Approvals
In all you do, always adhere to regulatory processes. Don’t cut corners with regulations. It might hurt you later. Always remember that the staff who may help you cut corners today may not be there tomorrow to cover up for you.
Also, make sure you make every DPRpayments through the approved government accounts.
✅ What Permits Do You Need?
There are basic requirements you must obtain before starting a cooking gas plant, regardless of the size. Even the road side gas seller need approval to operate these days.
Here are the permits you would need to process before you can be allowed to to commence sales of cooking gas, even before you should start construction.
You will need to get the following approvals:
♦️Town planning approval from ministry of lands and physical planning
♦️Police report from a divisional police station within the location
♦️Fire service report from the state fire service
♦️Environmental impact assessment report
♦️DPR (department of Petroleum Resource) approval
✅ Cost of Setting Up LPG Plant
The location is very important. It should be chosen properly. And whatever location you choose, you must ensure its assessed professionally. Don’t invest your money in any business blindly. Data is essential to your business success. Get credible and realistic data.
If location determines 75% of an LPG success, you should spend good money to confirm the viability of the location you plan to use. Don’t plan to invest tens of millions of naira without first spending hundreds of thousands just to conduct a location assessment study. Don’t be penny wise, pound foolish.
And if you are going for a loan, it’s important to present a better assessment of your location to your investor or lender.
✅ Cost of Setting Up Mini Gas Plant
If you can’t afford the cost of land you may consider setting up inside an existing Petrol Station. This kind of setup would require an add-on license from DPR. But it’s rare to find a petrol station that may want to lease space to you.
However, it’s not bad to try. It will cut down your cost by over 50 percent. It’s one of the cheapest ways to start a mini LPG plant. The cost of rental is low and the capacity of LPG is also within 2.5 to 5 metric tons.
✅ Cost of Approval Using a Petrol Station
LPG Add-on License – 300,000
Fire Service Certificate – 50,000
Police and EIA – 100,000
Authority to Construct (ATC) – 50,000
Tax Clearance Certificate – 50,000
Tank Data Sheet – 100,000
Sundry – 250,000
Total – 900,000
✅ Cost of Setting Up LPG Plant On An Empty Land
Anybody can setup in an empty land. So, you can purchase a land for your LPG plant setup. However, you need to know the DPR land Requirement rules. DPR specification is minimum land size of about 100 by 100 square feet.
You will also require to perform major construction work, like fireproof fencing, security house, dispense area and some office blocks. Not leaving out the tank area. You would require a building plan as well to put this cost into proper perspective.
Avoid assumptions when starting a gas plant, unless you have excess funding that you can always draw from if you got stuck. It’s better to get expert cost analysis done for you to the minutest details.
✅ Cost Of Approval For Empty Land
DPR Approval – 300,000
Police Report – 50,000
Fire Service Certificate – 50,000
Authority to Construct (ATC) – 400,000
Tax Clearance Certificate – 50,000
Tank Data Sheet – 100,000
EIA (Environmental Impact Assessment – 600,000
Sundry – 500,000
Total – 2,000,000
✅ Equipment Planning & Purchase
LPG plant equipment is the main item you should have proper consideration for in all of your plans. This equipment will be the main player in your day to day operation of the gas plant.
A bad equipment could mean many bad working days. So, making sure the best and quality equipment is procured should be utmost importance for you. I will strongly recommend that you go for new and high quality equipment.
Here are basic parts of a gas plant equipment:
Fire proof LPG Pump
Automatic shut off valve
✅ What’s The Cost Of LPG Equipment?
I will simply give you some current prices for new equipment for skid plants. Prices changes with time. Your business plan will be able to give you the most recent and applicable price for your plant.
Also, since the prices here are for new and complete skid plants, if you have options of buying items separately, or considering used equipment, or even using local fabrication, you should verify the cost and quality of equipment before making decision.
2.5MT mini plant cost around N8 million
5MT mini plant cost around N13 million
10MT plant cost around N24 million
20MT and above (enquiry for current price)
✅ LPG Plant Supply Partners, Logistics & Costs
To operate a successful LPG plant you will need regular supply of LPG product. While some mega LPG plants may be able to provide their own logistics to pickup gas when ever they require it and deliver to their plant, small plants don’t have such advantage.
You will depend on suppliers to help with regular refill of your plant. While you may start with the company that built your plant to get your initial supply, you should expect new suppliers will either come to you with their offer or you search for suppliers to add to your list.
✅ How Do You Refill Your Plant?
As a newbie in gas business this may seem as a challenge. But it’s not any issue at all. There are gas logistic companies that would deliver to your plant anywhere you are in Nigeria within 48 hours.
The price are also very competitive, due to the deregulated environment of LPG industry. This would also stop logistic companies from trying to sell at outrageous rates to you.
However, you will be charged for cost of transportation to your plant separately. To also ensure you don’t stay without product, you should always place your refill order 48 hours ahead of your need.
✅ Employment Plan & Management
The day to day operation of your gas plant require plant workers. You need to employ some people to help you do most of the work in the plant. If you are going to be personally present to run the plant, then you won’t be needing a plant manager.
But you will need to hire other workers you may require.
Plant manager who will be in charge of all operations at the plant
Cashier to help sell and collect money
Customer attendants to do the Refill to cylinders
Security personnel to help secure the plant at night
Also, it’s best to have an employee handbook to help you know the type of persons to employ, what they should be doing for you, the general workers guidelines, and what kind of training to give them to help improve their efficiency.
A consultant can develop one for you. It will also address management issues and help you understand best ways to manage your gas plant.
Finally, the best way to setup a cooking gas LPG plant as a newbie is to hire the services of a consultant. Also, follow who know road to prevent you from making some avoidable mistakes. And it will save you from unwarranted costs.
It’s better to avoid a costly mistake than trying to fix it with a high cost. While cooking gas plant maybe lucrative, a wrong setup approach may make it a pipe drain for your finances.
And if you need to raise capital through financial institutions, you need to present the best business plan that’s convincing enough to make them give you the amount you want. You can reach me for more consultation through Call/Text/WhatsApp: 07087770518.
Do you want to start one business that its profitability is insanely awesome because people can’t STOP cooking food. That business is in cooking gas plant. To set it up profitably you have to follow the right steps and professional advise. This business is very lucrative if you set it up the best way.
And I’m going to show you all about this business, how you can start it on small investment; how you can even have it where the consumers live that are easily accessible to buyers.
however, all you need to know how to start this cooking gas plant immediately is here- faster than you can read this article. If you haven’t read most of my startup articles here, please do so, and you will find other businesses I have shared that can help you create your source of income.
How LPG Cooking Gas Plant
Currently, the cooking gas plant is a very costly investment. In fact, DPR (The Directorate of Petroleum Resources) doesn’t want it easier, either as a way to protect big investors or simply because government would like this business to remain in the exclusivity.
Also, only a minimum size of 100 by 100 square feet of land space DPR can approve for the cooking gas plant setup. That’s at least a plot of Land. Although in some states you will require two plots of land to get an equivalent land size to match the DPR requirement.
In Lagos and most other states, you will need two plots of land to get this size of the area for the gas plant. Lagos lands are sold 120 by 60 square feet.
While Abia, Imo, Awka, Enugu and in most other states the size of a plot of land is 100 by 50 square feet. I’m only aware that Delta and Edo is exactly 100 by 100 square feet sizes for plots of land.
So, at the current land arrangements, you probably would be spending so much on just land acquisition alone before even considering other colossal cost implication of cooking gas plant.
Estimated LPG Cooking Gas Plant Cost Analysis
For example, a 10-tonne cooking gas plant setup can cost around N40 million to N100 million to fully setup – including all the regulatory documents, land purchase, building construction, operation cost and gas plant equipment. Most importantly, considering that the location of your gas plant is more important than any amount you can ever invest.
That is not a manageable amount to come by these days. That does not exclude the fact that your cooking gas plant has to be setup in outskirt of town – in remote locations that is far from the city center where most of the consumers live.
That is not an excellent site for a business that wants to be profitable. Its also a reason many gas plants suddenly started to shut down, as they become unprofitable. If you locate outside the busy city, and someone sets up close to the city, you will automatically lose most of your customers patronage. There’s no mystery to it. That’s just how location based business works.
If for any reason you want to setup in outskirt of the town, ensure the area is a fast developing one as well. You don’t need to wait 5 to 10 years when that areas opens up before you start making profit. Think first about the customers of today, and tomorrow, before thinking of those in forever.
You should set it up in the city where the consumers live. And beat all regulatory limitations that cooking gas plant have, by building a mini cooking gas plant that can be set up even in busy areas using already existing filling stations or land (if you can afford the cost of land at the city center).
Note that DPR is not against setting up cooking gas plants in the cities. Their rules says not to setup in residential area. every city has both residential and commercial areas. So, you can setup in commercial areas. Anywhere a petrol station is allowed legally, a gas plant Cam be allowed there too.
This mini cooking gas plant are capacities from 5 metric tons down to 2.5 metric tons plants. You can also setup inside a petrol station if the station is big enough and meets DPR requirement for an add-on LPG license. And you can find such location within the city Centre’s or close enough to where the consumers can access you.
One of the 5 year plan of the government through its new gas policy is to make cooking gas accessible to the consumers. So, your mini cooking gas plant is in line with government policy.
But you will still need to get DPR to approve it for you. There’s also space restriction requirements to meet. Most times, it advisable to conduct location assessment before applying for DPR approval. Reason is, once you have applied for approval if your location is rejected, you also lose the money you might have paid to government for the approval. You can hire a consultant to conduct this assessment for you. It’s not expensive at all.
LPG Plant Location Assessment Report:
Starting a business in uncertainty and fear is worse. You could lose your investment. Invest little to get your location assessed by a professional LPG consultant. An LPG gas consultant would charge between 100,000 to 150,000 naira to conduct this assessment for you, if you have a consultant near you t might be less. But where you can’t find one around, it would cost you more to cover costs like transport, hotel accommodation and feeding for a day or two, considering where the consultant is coming from.
One thing to consider here is that it’s cheaper to avoid mistakes than correcting costly errors of an LPG setup in a wrong location. Cooking gas is a location based business. Get it right from start. Avoid guessing, it can lead to much regrets later. Location assessment will give you the facts of your location. Its a physical assessment of your location.
You are getting the picture clearer now. There is no city in Nigeria where you can’t find filling stations in major city area to locate your mini cooking gas plant. The cost of buying lands is increasing daily. It may discourage small investors from tapping this huge potential in cooking gas plant business.
In fact, in major roads leading to many estates and even GRA’s we have filling stations. And these are the routes gas consumers take to work and their homes. The best location always wins in this business.
They pass these filling stations every day, and many of them never go to the outskirts of towns even in a whole year, unless when they are travelling or visiting someone there. Consumers no longer fancy going into the bush to buy cooking gas.
These stations are your secret weapon to set up your cooking gas station closer to the consumer. Although you will still need approval for them. And the requirement for a skid plant in a filling station might also make some filling station not suitable.
Now, you have to follow my instructions on how to go about it. It’s not every filling station that may be ideal for it.
LPG Plant Long Lease Option
Some petrol stations are too crowded and don’t have even enough space for their own business and so can’t accommodate a cooking gas plant by the side. However, you can also lease an empty land. Although, that would require paying more money for regulatory approval.
So, looking for a petrol station with a spacious environment is vital. Also, you can choose to lease the entire petrol station and add your cooking gas plant as a side business.
Or you rent space from the owner of the station for your cooking gas plant. I recommend the lease of 3 to 5 years. It will also be much cheaper because you get to pay in bulk and that gives you advantage to negotiate the rent lower.
If the site is perfect, I recommend you make an extended contract. And there is an excellent reason for that too. But if you are not so sure the site is excellent for cooking gas business, just do a short lease and add a renewable clause that won’t allow the owner kick you out after the end of the lease, Unless you still want to continue doing business there.
Business Plan & Viability Report
Once you have a location that you can use for your cooking gas plant, the next thing will be to conduct a feasibility study. I recommend you hire a good gas consultant. But ensure that it’s a custom report.
Some even copied from consultants and be marketing it online. They are not LPG consultants. They only sell you a copied business plan without any professional advise.
I advise that you shouldn’t buy this kind of plan. Such business plan is copy and paste for the sole purpose of getting your money. You can’t present such plan to a bank. You’re probably not the first who may have presented that copy to a financial institution for a loan application.
That plan is never written for the success of your own business. And it’s the same report that they give to everyone. The just update and add customer details and location and they have a business plan for you.
LPG Business Plant Content
However, I strongly recommend you actually hire a consultant and pay him for a custom business plan with feasibility study. It may cost you around N50,000 to N150,000 for a 2.5MT or 5MT plant capacity but anything above that may cost more. It will be professionally done and customized to your need and location.
I recommend it – just go for the custom business plan to be prepared specifically for you with your location target. It will help you start, build and sell profitably. Anything less than that is a waste of your money.
[A] Executive Summary
[B] PART ONE: LPG Plant Overview
Introduction to LPG Business
LPG Vision & Mission Statement
Best Value Proposition
Factors of Success In LPG Business
Current Status of LPG Plant
Brief on the LPG Industry
Impact of LPG On The Local Economy
[C] PART TWO: LPG Marketing Plan
LPG Product Description
LPG Plant Business Model
LPG Gas Opportunity
LPG Pricing Strategy
LPG Target Market
LPG Distribution & Delivery Plan
LPG Competitive Advantage
[D] PART THREE: LPG Investment Plan
Location Assessment Report
LPG Raw Materials
Cooking Gas Dispensing Equipment
LPG Distribution Process
LPG Production Cost
LPG Stock Control Process
Project Implementation Schedule
[E] PART FOUR: Organizational & Management Plan
Ownership Of The Plant
Profile of the Promoters
Management Staff & Support Units
Salary Financials & Schedule
[F] PART FIVE: LPG Funding & Loan Plan
LPG Financial Assumption
LPG Initial Capital Estimation
Source of Capital
Loan Security & Repayment Plan
[G] PART SIX: Risks & SWOT Analysis
LPG Business Risks
Cooking Gas Plant Approval Requirement
The next plan will be to get the necessary approvals. You may also need to hire a consultant if you don’t know how to go about it. But cost of securing approval for setting up inside a petrol station and on empty land are not the same. You can find other of my report on this business for more details.
Here you will also need the corporation of the petrol station owner. I also recommend that you hung your lease payment on the approval of the place for a cooking gas plant. Some petrol stations license are not up to date.
So you don’t pay until DPR approves that station for gas business. That would give you the corporation of the station owner.
LPG Plant Approval Stages
There may be several different approvals before DPR but that’s the work of a consultant is to help you with, so hire one for it if you must. But if you have the time do it yourself.
Apart from the government fees, a consultant may take N100, 000 to N300,000 as a fee for this consulting services. Also, let me recommend that you might need a police report and fire service approval.
A cooking gas plant consultant, will help you every step of your project and also handles training of your staff and safety trainings for the cooking gas plant operations.
These might cost you up to N100,000 depending on the city. Then DPR charges are not so official. There are many charges to it. It not fixed or stipulated. Maybe because it’s done by an external body outside DPR or simple a way DPR staff can extort more money for themselves.
Don’t ignore the Nigerian factor as well. There are money through the backdoor before even the payment payable to the government.
LPG Cooking Gas Plant Setup Cost
If all these processes are done that you now have the station to use and it has been approved by DPR, then we move on to building the cooking gas station. Let me explain here that this kind of gas station is easily moveable since you are not the owner of the station.
Also, if the site is not doing so well and you wish to move to another place, it’s easily transferable. However, the cost implication for setting up may not also be fully captured here.
There may be civil works required which cannot be quantified without a professional assessment of the site and the level of work needed. But the cost of installation of the gas station is based on the capacity you can afford.
I always recommend you go for 2.5 tons for a start. The equipment price is between N8 million to N10 million for brand new. If you can offer two of these to make it 5 tons, it will be perfect. The reason is so that you don’t always run out of gas entirely before you get a new supply if your plant is in a remote location or where gas supply maybe difficult to reach easily.
As one tank is emptied, you are selling from the second tank while you call for a refill of the empty container. Also, these small capacity is what can be approved for a gas station. I don’t recommend building a single 5-tonne capacity either. And the significant size of 10 tons is only reserved for cooking gas plant that is setup on a full land.
There are also other cost implications, which I have explained in another article HERE.
LPG Cooking Gas Supply
Once you setup you can now buy cooking gas to sell to customers. Now that your gas station is built and ready to go, you will need to order your first gas and start selling immediately. By the time your building, the neighborhood will be asking, what are they building here?
So, you have already done publicity, and now people are expecting to start buying cooking gas from you – don’t disappoint them. If you have the 2.5 tons, which is 2,500 KG capacity, then you should be budgeting around N1,250,000 or more as price may go up to fill this tank, depending on the current prevailing rate.
However, this is just an estimate because the gas price is not fixed. It changes regularly. Also, note that the price is inclusive of transportation cost. Some delivery trucks charge between N20 to N30 per KG. If you Multiply it by 2,500 KG, you will get an idea of the gas rate. I know the current retail price is N680 per KG.
Although like I said, this price can change, it’s as at the time of my writing. It can be lower or higher, but just know it’s moving and it’s not a static price. I hope this is very enlightening for you. If you need more clarification or need a business plan or a location assessment report done for you, please call or WhatsApp: 07087770518.
Starting a mini cooking gas plant maybe ideal if you have a petrol station that meets DPR requirement you can use. Your turnover for this business is usually high if you market it well.
However, make sure it’s strategically located, if not the purpose would have been defeated as well. Cooking gas customers that would patronize you will do so for their convenience. Study what they bigger plants are doing and see how you can match the convenience to your customers.
Finally, note that your setup cost can be around N6 million to N8 million. That’s if everything is done well and you followed proper advise. You can talk to me about your project and let’s reason it together and best way you can achieve it. And having someone to discuss with can help you articulate your challenges and ways to overcome them.