Retail Gas Business

Retail Gas Business nigeria

If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours. ― Ray Kroc

Most of the energy used for domestic cooking in Nigerian homes comes from traditional forms of energy like Firewood and Coal (10%), kerosene (DPK) (65%), and Gas (LPG) (25%).  Annual Consumption of cooking Gas stands at 300,000 Metric Tons Per Annum (300 million KG). There is a huge market potential for retailing cooking gas.

Cooking gas is called Liquefied Petroleum Gas; it has two major components namely Propane and Butane. Propane is mostly used in colder regions of the world while butane is used in hotter regions. Nigeria being situated in the hotter region; the standard composition of LPG is 100% butane and the propane level should not be more than 15% if it is present because of the temperature of our clime.

Cooking gas business is a very rewarding business venture, this is because the number of people making use of gas cooker is on the rise and every customer is in for a long-term relationship because they will always come back as soon they run out of gas. But just like every other life’s endeavour, it comes with its own trials/challenges!

Considering the negative impact of kerosene (subsidy on the economy) and firewood on the environment, Liquified Petroleum Gas (LPG) is environmental-friendly, much cheaper and cooks’ meal faster. it’s about time to look inward and invest in this emerging LPG (Liquified Petroleum Gas) market to grow the economy and reduce the emission of green-house gases thereby helping to lower global warming.

A huge and booming demand for cooking gas exists in most towns and cities nationwide today and has created lucrative opportunities for smart entrepreneurs. You can also be one of those smart entrepreneurs by tapping into the available opportunities in cooking gas retail business to make good profit.

This is an opportunity to launch your own business. However, cooking gas is a very volatile product and storing it can denote much danger. You must be a meticulous and careful person to succeed in this business. Before you think of investing in the cooking gas retail business, you need to learn about cooking gas retail business if you really want to succeed.

How to Start

1.       Training and Knowledge:

The secret of business is to know something that nobody else knows. ― Aristotle

This business involves buying large quantities of cooking gas, storing it and selling it to individuals for domestic purposes such as cooking. But before starting a cooking gas retail business, it is important to learn about the business. Some of the things to know about this business are:

  • How to measure cooking gas
  • Types of cooking gas and identifying quality gas
  • How and where to buy from
  • The different sizes of cooking gas cylinders
  • Handling of gas cylinders
  • How to refill a customer’s gas cylinder
  • Factors that affect the market price of cooking gas
  • Common challenges cooking gas retailers face

2.       Write a Business Plan:

Good fortune is what happens when opportunity meets with planning. Anonymous!

Anyone who Fails to plan is planning to fail. Write a business plan to capture your dream and desired goals within a finite time by setting deadlines. A business plan helps you in knowing the following:

  • Insight into the feasibility of the business
  • Required start-up capital
  • costs of running the business
  • the market and competition

3.       Registration & Permit:

Register your business with the Corporate Affairs Commission (CAC). Obtain the necessary permits from the state’s regulatory agency before commencement of the business.

4.       Location:

Empty pockets never held anyone back. Only empty heads and empty hearts can do that. — Norman Vincent Peale, church minister (1898–1993).

Look out for ideal location for your cooking gas retail business with a strong retail potential. Some areas are more viable than some therefore, it is important that you locate your business close to where there are many potential customers.

There are laid-down regulations concerning the site of a cooking gas retailing business. So, it is very important that you find out the rules that apply regarding property to be used for cooking gas retailing.

 5.      Needed Facilities:

He who works his land will have abundant food, but he who chases fantasies lacks judgment.      ……The Bible, Proverbs 12:11

How big you intend to start. If you’re starting as a:

  • Small Scale – Retailer with a small store, then gas cylinders will have to take the place of gas station (=N=250,000 to =N=350,000 needed to start)
  • Gas cylinders (12.5kg –25 pieces)
  • Long hose
  • Regulator (gas corks)
  • Industrial scale
  • A scale
  • Fire extinguisher
  • Medium & Large Scale – Major distributor: You will have to build your own mini gas station/plant. It is capital intensive!

Before your mini gas skid plant is sited and installed in any given location, a proper Environmental Impact Assessment (EIA) is carried out by Department of Petroleum Resources (DPR), followed by calibration test, pressure test and facility integrity test to ascertain the safety compliance limit of the gas infrastructure.

A DPR permit is issued once all the necessary standards are met. This permit or license is issued upon submission and verification of the following documents:

  • Police report
  • Fire planning approval
  • Town planning permit
  • Proposed plant architectural layout
  • Environmental Impact Analysis test approval
  • State land and physical planning permit

After you are done with the plant construction, install the essential equipment and machinery for the plant operation. You need to obtain a license of operation from the DPR with the following documents:

  • Fire response report
  • Pressure test report
  • SON certification for the pressurized vessels.

A gas skid plant comes with a Pressure Relief Valve (PRV) which serves as a vent for built-up pressure. Under a high external temperature (due to a nearby fire incident for instance), the Pressure Relief Valve (PRV) releases the excess pressure fast to prevent the rupturing of the vessel (tank or cylinder).

A gas skid plant has a wall thickness of about 15cm. This serves as a fire and pressure resistance, preventing the rupturing of the vessel (tank and cylinder) under a high and prolonged fire incidence.

In accordance with international best standard, a gas plant is filled up to about 85% capacity to provide enough space for the thermal expansion of the contained gas when the surrounding temperature increases.

However, you should remember to structure wherever you’ll be using in such a way that where the gas cylinders will be kept for filling is safe and a bit distant from where cash transactions will be made.

7.         Staff Recruitment:

Coming together is a beginning. Keeping together is progress. Working together is success. ― Henry Ford

Recruit the necessary personnel and give them the required training!

8.       Transportation:

Confidence is contagious; so is lack of confidence. ― Vince Lombardi

  • Small Scale Entrepreneurs: You should arrange for transportation from the point of purchase plant to your intended location. Ownership of a delivery vehicle will be an added advantage and of great value to the business.
  • Medium and Large Scale: To offer incentives to your customers, secure a hauling vehicle of your own or lease one; you could offer home delivery or transport the gas products to customers’ destinations. Due to volatile nature of cooking gas, ensure that your vehicle, whether purchased or leased, must be in very good condition to meet the requirements for vehicles hauling such products.

9.       Insure your business:

Private money can take risks in a way that government money often isn’t willing to. – Bill Gates.

  • Small Scale: This is optional for small scale entrepreneurs.
  • Medium & Large Scale: The cooking gas retail business is capital-intensive! By implication, a fire hazard can wipe you out financially. Insurance policy is necessary because of fire accidents due to LPG being a very volatile and inflammable product.

10.     Marketing:

In order to succeed, your desire for success should be greater than your fear of failure. – Bill Cosby

Market your business using various outlet like radio, TV, fliers, social media, company website, web adverts, etc.

Adopt other aggressive marketing strategies through various means like: offering attractive discounts, reward for referrals, promos etc.

11.     Useful Tips:

1.         How to handle gas cylinders:

  • Always place gas cylinders in a vertical position, unless stated otherwise by the manufacturer.
  • Restrain cylinders securely to prevent them from falling over.
  • Always ensure that the cylinder valves are tightly closed.
  • Ensure that the valve is protected by a valve cap to prevent any damage if the cylinder is dropped.
  • When loading or unloading the cylinders, don’t drag, drop or roll the cylinder as these can cause major physical damages to the cylinders.
  • Always ensure that the cylinders are kept in a well-ventilated warehouse with regards to the manufacturer’s ambient temperature standard.
  • Always ensure that the cylinders are placed on wooden pallet and not on a bare floor.
    Prevent direct physical contact among cylinders in storage.

2.       Further Tips

  • Maintain high safety standard in your premises and refill your customers gas tanks in open places.
  • Respond promptly to enquiries from regulatory agencies to avoid penalties.
  • Always be aware of and remain compliant with current laws guiding the operation of your business.
  • Stay in touch with your suppliers for changes in this business.
  • Be prepared for instability due to rises and falls of gas price.
  • Get insurance cover.
  • Protect yourself and your body by using gas masks and put them on when refilling the tanks.

The golden rule for every business man is this: “Put yourself in your customer’s place. ― Orison Swett Marden

Good Luck!

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