Do you know how to start cooking gas business? Even if you do know, I want to share with you 5 more reasons you should be starting one now. If you have been procrastinating, stop it now and join this business. Even the government wants you to start now and not tomorrow.
A lot of things are happening in the cooking gas business. And you won’t want to miss out the good part, which is to start cooking gas business now that the market is very juicy with less competition.
If you have been observing the news lately, there is a push by the federal government of Nigeria to deepen the usage of LPG in the country. And this push will start yielding results soon. If you have been procrastinating about starting your own cooking gas plant, this maybe the reason to revisit that plan and put it back to work.
Understand LPG Demand Curve
For most people, LPG is just cooking gas. And as far as they are concern, it not such a huge business. Especially, the big investors. They consider LPG as business for the startup investor. They couldn’t see the huge figures.
At most they say, 60,000 kg in monthly sales would give you just N16.8 million in monthly revenue. What they didn’t know is that gas plant have sizes. Moreover, if you setup 20 of those plants that would be N16.8 million multiplied by 20. Do the maths for yourself.
Another excuse is that demand is not daily like fuel consumption. Yes, demand is not daily for cooking gas, but imagine the demand curve when 100 percent of the households in the country uses cooking gas. United nation puts Nigeria household figure at average of 6 persons. If you divide 200 million by 6 persons per household that would give you 33 million households buying cooking gas on monthly basis.
This demand curves is growing that’s why many can’t see it yet. By positioning yourself now in the market is like buying Bitcoin when the price was just 1 bitcoin to 0.0003 dollars. Don’t forget that this market is dynamic. Growth can be exponential.
Why Start Cooking Gas Business
I have written several articles to help you start cooking gas business in Nigeria. You can see most of them when you search the content on cooking gas in this blog. There’s so much insight to get from each of the articles I have written on the subject. But this one is fresh reasons I would encourage anyone to start cooking gas business now.
Although, I will still give more details on my reasons but I want to just list them out for you to see:
- 9,000 filling stations approved by government to sell LPG
- NNPC to build gas plants nationwide
- Government to approve free cylinder for Nigerians
- Price of cooking gas set to fall
- DPR lowers licensing fees
These are just a few reasons I can share with you now because they are recent happenings. There are a lot more reasons you should be investing in cooking gas business now.
9,000 Filling Stations Approved
This may sound like it’s no news, but I tell you, it’s the biggest news in LPG industry. Government is pushing to deepen the consumption level of cooking gas and that should impress you. Gas would soon overtake petrol in the country. Some may laugh this off, but wait till you read my article on The Huge Benefits Of LPG Powered Cars. This articles would expose to you the reason gas would takeover our cars from petrol engines.
So, the government wants to hasten the speed for LPG adoption in the country by approving its top 9,000 filling stations in the country to adopt LPG refilling. And that’s just 37 percent of the total number of approved filling stations by DPR. According to DPR, these stations are those with the required capacity to add LPG in their existing stations.
The other 63 percent are also not left out. Let’s assume that the number of filling stations that make up this 63 percent are 17,900. That means in total we have about 26,900 stations nationwide. If all these have LPG installed, it’s huge and would force the adoption in just a few years time.
NNPC Is LPG Stations Nationwide
If you think it will just end with independent filling stations, you are going to be shocked. Government is not leaving everything to just independent stations. NNPC and its franchise partners are also joining the train.
Imagine how spread NNPC stations are, and what would happen as they open up new outlets and sign new franchise deals. As an investor it should be making you think how to leverage on cooking gas growth.
The Free Cylinder Project
You should be acquainted with government plan to make cylinders free of charge (FOC). That project is not dead, it’s coming alive soon. As the country plan a switch from petrol to gas, its firing its drive on all cylinders.
There’s a huge advantage from this free cylinder project. It will drive the adoption of LPG gas by making it easier for every household in Nigeria to switch to cooking gas.
This would increase exponentially the demand for cooking gas. That’s a huge return on investment for gas plant owners.
Falling Price Of LPG
The whole reason for the drive for LPG adoption is to bring down the price. Due to low adoption level, it cost more to distribute the product across the country. There’s limit to the quantity to be made available for consumption.
But as demand explodes, more investors like the Dangote refinery and Master Energy Petrochemical would emerge. The volume of LPG available would increase, and the competition to sell more would drive down the price.
DPR Lowering Licensing Fees
Also, what’s more interesting for investors is the sudden love from DPR. Inasmuch as DPR would not want to compromise on its requirement on how to start cooking gas business in Nigeria, it has lowered most of its fees to drive adoption.
Here’s a list of DPR requirements in terms of finances. The breakdown is in two options:
- Cost requirement for setting up standalone gas plant
- Cost requirement for setting up gas plant in filling station
Standalone Gas Plant:
- DPR Approval: N300,000
- Police Report: N150,000
- Fire Service Certificate: N50,000
- Authority to Construct (ATC): N400,000
- Tax Clearance Certificate : N50,000
- Tank Data Sheet: N100,000
- Environmental Assessment: N600,000
- Sundry : N400,000
- Total: N2,000,000
Using A Petrol Station:
- LPG Add-on License: N300,000
- Fire Service Certificate| N50,000
- Police and EIA: N100,000
- Authority to Construct (ATC): N50,000
- Tax Clearance Certificate: N50,000
- Tank Data Sheet: N100,000
- Sundry : N250,000
- Total: 900,000
Note: some of the requirements mentioned above can be personally obtained by you to save cost. Yes, these rates are based on using an agent or consultant. It can save some small cost by doing some yourself. Like, police report and fire service approval.
One thing to takeout from all these is that LPG would takeover from petrol. That’s not just an imagination, it’s going to happen so fast. I give it just few years from now if government didn’t relent in this new drive for LPG adoption.
And to use LPG to run cars it would increase the demand for cooking gas and it will overtake petrol. This is what the government want to achieve. To reduce dependent on petrol and start consuming the abundant gas resources in the country. Because gas is not imported and it’s being extracted naturally, requiring no refining.
All these would happen in a short time. As an interested investor, you should not procrastinate now. The race to take up slots in LPG plant investment is now. If you miss this first rush, the second rush may not be easier. I can imagine DPR would tighten its requirements once substantial quantity of LPG is being consumed in the country.