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How to Know LPG Plant Location That’s Profitable

There are no fixed cost requirement for starting cooking gas plant. You have to consider some important factors like the location, type of cooking gas tank, cost of the land or rental fees (if applicable), etcetera.

And the cost of picking any option may vary from city to city. And the location of the land may also affect the cost of the land. For example, lands in government reserved areas (GRA), or along major roads would definitely cost more than those in inner roads and streets, because they have more real estate value by nature. 

You have to understand why your location is important when started a cooking gas plant. It’s the most important decision you make when setting up a gas plant. If you make mistake in location, the business is already a huge mistake. 

Land don’t only see picking a good location just for getting DPR approval. DPR Approval only deals with the safety of your environment, people and important infrastructure. DPR is not concerned about your cooking gas business profitability. It’s your problem to worry about alone. 

That’s why it’s advisable to always hire a consultant to conduct a location viability assessment of your location. There ares everlasting factors that would make a seemingly good location not profitable for your investment. And it’s only a good cooking gas consultant that can discover it. 

Let’s begin to look at how you make good choice about gas plant location.

1A) Choosing the right cooking gas plant location

However, a good cooking plant is more of the viability of the location than the cost involved,

For your cooking gas plant to be profitable, you need to setup in the best location in your target city. Although government regulation may affect where you can site your cooking gas plant but the closer you get to your target gas consumers the better.

Choosing the best location would depend on your target city. But there are things to look out for. The higher the number of population the better. You also need to check their demand for cooking gas. A larger population in the country is still using kerosene for cooking.

If you setup in such location you will be struggling to make sells. So you need to avoid such mistakes. I know that eventually everyone will embrace cooking gas but until that happens your location target should be only those who use gas for cooking.

For now, cooking gas is a trending commodity. So you can even do your personal location test by watching the kind of people living around the location. Income base is one big factor to consider here. Naturally people with higher income would use cooking gas.

Also, students in higher institutions would use cooking gas. If you have a tertiary institution within your location that’s an identified market. Although their individual purchase will be low but their population is a huge potential.

The size of your cooking gas tank might also affect your choice of location. The smaller the size the chances for approval close to residential location. If your tank is bigger your best location is along major road or commercial plot. 

1B) How to pick location for your Cooking Gas plant

  • DPR will not approve location near school, church, hospital or places with large crowd
  • The size of your tank will determine the kind of location that’s suitable
  • Using petrol filling station is for only tank size of 5 tones and below. But depending on the location most 5 tones will not be approved.
  • Locate in outskirt of town or commercial plot if you plan to setup large cooking gas tanks of up to 10 or 20 tonnes or more. (To setup large tanks of 10 or 20 tonnes or more you should have plans to sell wholesale or offer refill for other small gas tank owners).
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Most Profitable Locations: the price of land may affect where you locate your cooking gas plant. And avoid the temptation to buy or lease cheap space for your gas plant. If there is one huge investment in your cooking gas plant it should be your location.

Take cue from successful businesses like banks. They locate their branches in high brown areas. The reason is because the customers with the most money stay in high brown locations.

The same principle applies to your cooking gas business. Although you might face some challenges with even the customers who may push against the approval for your gas plant. But you can locate closer to a high brown area or density populated areas of the city.

2A) Land size and documentation

Another thing you must consider when setting up your cooking gas tank is the size of the land to use. It’s not really a problem but you have to meet the basic DPR land requirement.

The Directorate Of Petroleum Resources (DPR) only approves land size of 100 meters by 100 meters for cooking gas plant. This size of land is more than normal plot of land, which is 120 meters by 60 meters in some states or 50 meters by 100 meters in other states.

The only state known to me that sells plots in 100 by 100 meters is delta state. And that’s the only state where you would need just a plot of land to start cooking gas plant. Other states you will require 2 plots of land.

It’s usually advised to just provide 2 plots of land to avoid any struggle with DPR. They can frustrate your efforts for just this reason alone. Although, some people still manipulate it with land survey. But I strongly advice that you avoid doing it. It will backfire in the future.

Cost of Lands: the cost of land for your cooking gas plant is determined by the price of land in your city.

Related: How To Get DPR Approval For Cooking Gas Plant 

2B) Land lease agreement ideas

Although, using your own land is the best advise I can give you, that doesn’t mean you cannot lease land or space for your cooking gas plant. And leasing is not just for those who cannot afford to buy land.

I used to discourage leasing for several reasons but now I strongly advise you lease if you find the best location where you don’t have lands to buy. And if you are doing mini gas plant like the 2.5 tonnes, I recommend you setup in highly populated cooking gas consumer area.

And if leasing is the only option go for it. And I recommend leasing space inside a petrol station if possible. It has its benefits and can speed up your necessary approvals from DPR.

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It can also reduce your cost. Leasing and buying land have huge cost in between them.

With leasing you also set it up in the city where the consumers live. And if you lease space in an existing filling station you beat all regulatory limitations that cooking gas plant have. By building a mini gas station that can be set up even in busy areas using already existing filling stations.

You are getting the picture clearer now. There is no city in Nigeria where you can’t find filling stations in major residential area or close enough for consumers to patronize you from the main city centre without going to outskirts of town.

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. 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.

2C) The Best Lease Option:

Some filling stations are too crowded and don’t have even enough space for their own business and so can’t accommodate a cooking gas station by the side.

So, looking for one with a spacious environment is vital. Also, you can choose to lease the entire petrol station and add your cooking gas station as a side business. Or you rent space from the owner of the station for your cooking gas station.

However, which option you may choice, always go for a long lease agreement. It’s just so that you stay safe from owners Manipulation. I recommend the lease of 5 to 10 years. It might even cost as much as buying your own land at the outskirt of town. But don’t be tempted.

If the site is perfect, I recommend you make an extended contract. And there is an excellent reason for that too.

However, if you are not so sure the site is excellent for gas business, just do a short lease and add a renewable clause that won’t allow the owner kick you out after the end if you still want to continue doing business there.

3A) Importance of feasibility study

I strongly recommend that you get a feasibility study before setting up your cooking gas plant. A lot of business owners may not understand why I’m emphasizing on it. Unlike most businesses, that are now driven by the internet revolution, the gas business is controlled by location.

And without a proper feasibility report you might site the plant wrongly and give room for a competitor to come and take the best market in your city.

A lot of times where you locate your cooking gas plant determines who patronizes you. The weight and size of cooking gas cylinders are also a contributing factor. Wether it’s the big or small cylinders, customers don’t want to go far to buy cooking gas from their homes.

The heavy cylinders require transportation to and back from gas plants during refill. While the small cylinder owners won’t like to pay transport to go long distance just to buy like 3 KG gas.

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3B) See why you need a feasibility report for your cooking gas plant:

  • it shows you the best location to setup your cooking gas plant
  • It gives you the sales estimates and profit potentials of your cooking gas plant
  • It shows your the right estimate of consumer population and their cooking gas purchasing power
  • It helps to also analyze your cash flow so you can properly know how much running cost you will need to get started
  • It can also stop you from making wrong investment in cooking gas business
  • It also helps to provide you with all the necessary cost and expenditures so you don’t overspend on any thing during setup
  • And other intangible reasons

You can see that it’s not a waste of money to hire a professional to prepare a cooking gas plant feasibility study for you. It’s actually a huge mistake if you don’t get one done before you get started. Although you may never know how much money you missed if the business didn’t fail.

I consider it a wise investment to spend between N150,000 to N500,000 as the case may be to get a feasibility slide conducted in the city you want to setup your cooking gas plant. For a cooking gas plant business plan with feasibility study report and financial analysis, call this number 07087770518. Facebook: www.facebook.com/rhinogas

It can save you from huge investment loss in excess of hundred million. Who knows, but we don’t pray to find out. Rather let’s do the needful when it should be done.

Conclusion

The most important part of any building is the foundation. The same applies to cooking gas business. You have to follow the right steps to get it done right. Remember, it’s a business you probably know little or not. You are better off with hiring consultants in cooking gas business.

However, I strongly recommend that you get your business plan and feasibility study report done first before you even think of registering a company or buying a land. Although you should a location in mind and the name you would like to use. But don’t start spending money when you don’t even know the viability of the business in your proposed location.

Think of it like this, it’s better you know first whether it would work or not than finding out later that the location is not suitable or there are fewer patronage for your business there.

MORE RELATED LINKS:

How LPG Gas Plant Works – A Complete Setup Guide
How to Package A Cooking Gas Business Plan

 

 

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