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:
- As Cooking gas
- As AutoGas
- 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.
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:
- Converter-and-mixer systems
- Vapour phase injection (VPI)
- Liquid phase injection (LPI)
- 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.
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.