The consumption of cooking gas in Nigeria has grown from 110,000MT per annum in 2013 to 400,000MT in 2016. What is the implication of this for the Nigerian entrepreneur? It shows simply, that without a doubt that the cooking gas business in Nigeria is a risk worth delving into in Nigeria.
Nigeria is well-known as one of the big oil producing countries in the world. It has also been known to derive a larger percentage of its revenue from oil. Globally, petroleum products are also thought of as an aspect of the economy that you can never go wrong with. But among all the petroleum products, gas seems to be the least thought of in this way. As a matter of fact, statistics conducted some years ago showed that only about about 5% consumption of the potential of LPG was used in the world.
But presently, we are seeing changes in the consumption of cooking gas. More people are seeing the usefulness and convenience of LPG. One of the menaces of the Nigerian society is lack of electricity and although, most people would prefer to rely on electricity in their kitchens, that preference is not realistic in Nigeria. A lot of these people therefore substitute their energy use in their kitchens with kerosene. When they discover cooking gas however, which is arguably a better alternative to kerosene, they find out not only does it cook food faster, but it is also ultimately cheaper.
What the above premise is driving at, is that the search for a business to go into in the country is over. If you are an investor or just a person who wants to go into business, the cooking gas business is the one for you. Even in this period of recession when businesses are closing in Nigeria, petroleum products don’t run at a loss, much less, the fuel used for cooking. As bad as the economy is, people are still going to eat and they would need to buy fuel to cook their food.
However, there are several things that would have to be put into consideration before you can start a cooking gas business in Nigeria.
Get an LPG Business Intelligence Report: Knowledge is universal and is not restricted to any particular area. If you want to succeed in any endeavour, you are in need of knowledge. As a matter of fact, it is advisable that you get knowledge before delving into the business. You should plan before embarking on it in the first place, knowing the amount of gas plants in the area you want to set up, their average turn-around time, etc so it will not be a case of a man testing the depth of a river with both feet. Knowledge will give you insight into the dos and don’ts of the business as you would be learning from the experience of people before you. And apart from that, knowledge will help you know if you are ready and fully equipped for the gas business.
Land: Apart from the fact that you need a space for your business, in the case of cooking gas, the aspect of land is even more crucial simply because of the environmental and health implications of cooking gas. Therefore, in accordance to the requirement of the DPR (Department of Petroleum Resources), the position of the plant must be at least 15 meters from any building containing flammable materials; residential buildings or filling sheds for example. The reason for this is because before you are granted a license (which we would be addressing), the DPR would come for inspection and they would need to see this is place before your application can be approved.
Capital and Labour: There is not a single business that exists for which you don’t need capital and you would need a lot of it for starting cooking gas business, to be candid. This is because you would need to buy all the equipment and these are also some of the things the DPR would look out for prior to granting you a license. Apart from the DPR needing to see this, you cannot really function without this equipment. It would be like a doctor without a stethoscope. Some of the equipment necessary includes; the testing pool, valve screwing equipment, an electronic carousel, a mechanical carousel, electronic scales and mechanical scales among others. In the same way, you would need to employ several capable hands who would help you operate this equipment and run the business.
Licensing and Permits: This is the stage peculiar to the Nigerian situation as the requirements are based on what has been stipulated by the DPR. The following information would also help in setting up a cooking gas business. The approval is done in the third phase, you will be required to have the following permits per phase:
Site Suitability Report: This is the first stage, DPR will visit the site to inform you if it is appropriate to be used to set-up a filling plant
• Certificate of Ownership (C/O) of the property or any proof of ownership
• An application letter for DPR suitability inspection (to be addressed to the comptroller of DPR in the state you want to set-up the plant)
• Survey Plan of the Land
• Company certificate of incorporation and Memorandum of Association
• Tax Clearance certificate
• Location Map of the Land (1km adjoing the property to be used)
Approval to construct: After the DPR has given you approval to move forward with the plant, you will need to prepare and submit the following documents
• Police Report
• Town Planning Permit
• Fire Planning Approval
• State Land and Physical Planning Permit
• Layout drawing of the proposed plant
• Carry Out an Environmental Impact Analysis
Approval to operate: After the Plant has been set-up, the final stage is to certify the installation and materials used to build the facility.
• Pressure Test Report
• Fire Response Report
• SON certification for the pressured vessels
Insurance: Insurance is not indigenous to Nigeria and so, many Nigerians do not see the use. Now, this isn’t compulsory but you need to see the need to insure your business, mainly because you are dealing with flammables. Other businesses might take the risk of not insuring their business but you cannot afford to take that risk. Although, gas plants rarely blow up as far as you are keeping all your safety measures but we cannot be too careful. Sometimes, to be realistic, things beyond our control occur. If moments like that arise, you would not run at a loss if you were insured. You should research to find insurance that is most suitable for your business.
Marketing: Most of the time, players in the petroleum products space are known to not take marketing seriously, especially when it has to do with small businesses. But, we must come to the realization that if you do not create awareness, there is a likelihood that people will not know about it. There are a lot of people that will naturally need whatever you are selling but when they have no idea that you are selling it, then your opening a business will most likely be an exercise in futility. If you want your business to be known, you must make a conscious effort to make it known. However, it is important to note at this juncture, that there is a difference between doing something and doing it well. You have to master the art of marketing and advertising. If you can afford it, you can work with Kiakiagas Media team and if you can’t, just be creative about what would work in that locality.
Similarly, it would do you a world of good to get training. There are a lot of intricacies and secret strategies of the business that would be somewhat esoteric and you would not be privy to if you do not get into the system. Ever wondered why most people who own a TV or radio stations today were formerly broadcasters or presenters before? In the same vein, try to work with someone in the business so as to acquaint yourself with all you would need to work out your own business.
Be wise: After all is said and done, you have two choices, read this article, decide you want to go into cooking gas business and completely ignore all you have read here OR decide to go into the business and take into consideration all you have learned about from this article. Wisdom is usually defined as the application of knowledge. Having the information would not help you if you don’t apply the information you have learnt.
Therefore, if you decide to go into cooking gas business and you want to be successful at it, be sure to put all the above into practice.
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