I want to start kerosene vending business, I have about 700 thousand Naira capital and a plot where I can operate. I’ve asked my neighbour who is into the business but he turned deaf ear because he thinks I could give him a though competition. what I need to know basically are:
- How much will I get a litre and what is my possible gain per litre?
- How much does Pumping machine cost?
- What do I stand to risk?
I’m really interested in the number question because it’s what I need to draft my business plan and give it a proper feasibility study. A fast response will be appreciated.
it’s good to know that you have the thought of starting your own business, a kerosene business which is one of the best business and lucrative business in the country, although with your capital, I bet you will be the one to operate the station for the first few months, if not just forget it because nobody else will manage it the way you will (am sure you would want to record a loss of N700, 000).
Kerosene is one of the most essential petroleum product in Nigeria and is used extensively in both rural and urban areas. Almost every home make use of Kerosene in Nigeria in one way or the other. This is why people always experience hardship whenever kerosene goes scarce.
Kerosene is equally one of the petroleum product in Nigeria that make huge money for the oil and gas entrepreneurs. People are said to be making millions of naira in the business everyday and from my findings, I can tell you it is a business that worth investing into. It is so lucrative that you can make your entire investment capital back from your first month sales!
Why Is Kerosene Business In Nigeria Very Lucrative?
One basic reason for the profitability of Kerosene is the high demand for the product caused by the very high population of low income earners in Nigeria. 11,000,000 litres of Kerosene is said to be consumed everyday and the demand can only get higher due the ever increase in population.
Another reason is lack of proper supply of electricity in Nigeria. Most homes depend heavily on Kerosene for their cooking and other home energy related purposes and simply can not do with the product.
Because it is a product that is in high demand, dealer in Kerosene make quick sales and return back for another round of supply. The result is that they make more and more profit as the around trips continues.
The disparity in the product pricing is probably the biggest reason why Kerosene business is very lucrative. Most people are ignorant of the real official price of DPK but the dealers knows exactly and are cashing on peoples ignorance to make huge profit even if it is unjustified.
Kerosene is officially sold at N50 by the NNPC. From NNPC you can land the product at unit cost of N150 per litre and sell for N200 or 220per litre.
All you need to do is to know your way, that is what filling station owners and other dealers do. Though I don’t support sharp practices and taking advantage of peoples ignorance but that isn’t my duty to control, it is the duty of the Government and the price regulatory body.
If you lift 10,000 litres of Kerosene from the NNPC or other major dealers like the Capital Oil, sell for 200 and gain at least N50 per litre, you will gain N50 x 10,000 = N500,000. A dealer confirmed that they make N1,900,000 profit from 33,000 litres of Kerosene.
What You Need To Get Into Kerosene Business
Kerosene business is one of the easiest business to start and the capital requirement is very very minimal compared to other oil and gas related businesses. Everything put together may not cost more than N700,000 at most N1,000,000 depending on the level you want to start from.
Here are some of the things you need to get you started as soon as you can.
1. Business Location – Since the sale will be from the surface tank, you will need a business place or location where you can put your tank.
Any place where there is reasonable population of people is ideal for the business. It could just be in front of your resident or the nearest major road side. If it is in front of your resident, you wouldn’t need to spend extra money for the rent.
In which ever way, you may just budget N30,000 at most for that. In some cases, you may even get it for free depending on who you know.
2. Surface Tank – The Welders will construct a very good surface tank for you. Look for a very good welder that is not far from the proposed business location to ease the cost of transporting the tank. Construct 10,000 litres volume tank but let them make it 10,500 litres to be able to accommodate all your Kerosene.
You can do 15,000 litres if you want. It wouldn’t cost you more than N100,000. Make sure it is properly welded to avoid leakage. Coat the inside and outside against rust, the welder will do that as well.
3. Source Your Kerosene – Independent Marketers controls more than 60% of Kerosene sales, while NNPC controls maybe 40% of the sales through the Pipeline and Product Marketing Company, a subsidiary of NNPC. You can buy directly from the source. I am seeking for additional information how you can get it from there and will update here very soon.
You can get the product from other Independent marketers, Capital Oil Ltd and the rest. There are other countless sources where you can buy Kerosene but beware of adulterated product. You may be arrested if the Kerosene get exploded in peoples home.
hope this my Kerosene business beginners startup guide help, if not, I could get some other one’s drafted or recommend some articles