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.
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.
And all you need to know how to start this cooking gas plant immediately – 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.
THE OLD 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.
In Abia, Imo, Awka, Enugu and most 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.
For example, a 10-tonne cooking gas plant setup can cost around N40 million to N60 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 centre where most of the consumers live.
That is not an excellent site for a business that wants to be profitable. That is why 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.
LEASING A COOKING GAS STATION:
Here is my deal, I want to show you how you can set up at a lower cost. And also 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, with an LPG Skid 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 centre).
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 tonne down to 2.5 and 0.5 metric tonne 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. The 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.
LOCATION ASSESSMENT REPORT:
So, spending a little change to obtain a valid location assessment will save you millions. An LPG gas consultant would charge between 30,000 to 50,000 naira to conduct this sssessment for you, if you have a consultant near you. But where you can’t find one around, it would cost you extra fees like transport, hotel accommodation and feeding for a day or two, considering where the consultant is coming from.
A short cut would be to pay the consultant just N80,000 and let him deal with his hotel feeding and transportation to avoid paying flight ticket and lodging him in a five star hotel.
One thing to consider here is that it’s cheaper to avoid mistakes than correcting errors of a mistake. Cooking gas is a location based business. And the first DPR approval in the 3 licensing stages is LOCATION APPROVAL. That’s how it all starts. This stage of approval goes with tests that are conducted by DPR or approved consultants that would cost money, and you are paying for it (as non refundable fees).
MORE ON LEASING:
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.
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.
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.
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.
LONG LEASE OPTION IS GREAT:
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, if you still want to continue doing business there.
COOKING GAS PLANT BUSINESS PLAN & VIABILITY REPORT:
Once you have a petrol station that you can use for your gas station, 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. There are business plans being sold for 20k by big gas plant equipment companies.
I advise that you shouldn’t buy this report. It’s solely packaged to sell their equipment. And they will never visit your location to know if that place is viable. Such business plan is copy and paste for the sole purpose of selling their gas plant equipment. You can’t present such plan to a bank. You’re probably not the first who bought for getting a bank loan.
The real intention of these companies is just to sell their cooking gas plant equipment. 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.
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 N150,000 to N300,000. 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. It’s just like buying tissue paper when you can use water to wash up clean.
GAS STATION 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.
There may be several different approvals before DPR but that’s the work of a consultant 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.
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 tonnes for a start. The price is between N4 million to N6 million. If you can offer two of these to make it 5 tonnes, it will be perfect. The reason is so that you don’t always run out of gas entirely before you get a new supply.
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 tonnes is only reserved for cooking gas plant that is setup on a full land.
The cost here includes the complete gas plant, transportation and installation. I know some buy in parts and assemble. It’s better to buy fully setup plant. It saves time, and money. You wouldn’t want the hassles of technicians. Handwork people can frustrate your business.
There are also other cost implications, which I have explained in another article HERE.
COOKING GAS SUPPLY AND RATE:
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 neighbourhood 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 tonne, which is 2,500 KG capacity, then you should be budgeting around N440,000 or less to fill this tank, depending on the current preventing 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 divide this N440,000 by 2,500 KG, you will get an idea of the gas rate. I know the prevailing retail price is N280 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 my consulting services, please do contact me on 07087770518 or contact me on this WhatsApp Number: 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 patronise 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.
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