It is no news that Kerosene is now more expensive than cooking gas, and no one can stay without food. So, cooking is a must one way or the other.
And even those that buy food from eateries contribute more to the high demand for cooking gas than those who cook at home. You can ask me in the comment question if you don’t understand how.
So with the daily increment in the price of kerosene in Nigeria, the cooking gas business has now become one of the lucrative businesses to venture into in Nigeria because of the shift in demand from kerosene to cooking gas.
As I do say;
As lucrative as any business in this world could be, you must understand that the knowledge aspect of that business choice is more important than the capital you've gathered from collective effort or from your life savings.
In this article, I will be showing you how to start a cooking gas business in Nigeria and also how to make good profits monthly.
Table of Contents
How profitable is the cooking gas business in Nigeria
The cooking gas business is profitable in Nigeria as you can make as high as N300,000 monthly within your first three months of starting this business.
But like any business, there are factors to consider that can influence its profitability. It’s crucial to be aware that unexpected events can occasionally throw a wrench in your profit-making machine.
Imagine a scenario where there’s a sneaky leakage of gas or an unfortunate hosepipe busts, causing some wastage. In such cases, you might break even or experience a minor loss. It’s just a part of the game.
But fear not! With proper safety measures in place and vigilant management, these hiccups can be minimized, ensuring that your cooking gas refilling business remains a profitable venture.
So, if you’re seeking a business opportunity that can fill your coffers while serving a vital need in the community, look no further. The cooking gas refilling business in Nigeria is ready to ignite your entrepreneurial journey and fuel your success.
Calculation of the Profitability of a cooking gas business on a small scale
There are different Kg of gas cylinders you can start with, in this business. They range from; 50kg, 25kg, 20kg, 12.5kg, 10kg, etc.
Let’s assume you choose to start with 12.5kg (which obviously is the most popular kg), each time you fill this cylinder you can make as much as 500 Naira when you sell it to consumers as a refill.
If that 500 Naira is maintained for ten days, that is 5k for you.
But we both know you definitely going to refill more than one 12.5kg cylinder in a day.
The price to fill a 12.5kg at the depot varies a lot but it mostly falls below 3,500. So let’s say you fill at 3,500 and you sell at 4,000niara to consumers, this gets you 500 Naira as profit.
This means if ten persons come to get gas from you in a day, it gives you 5,000naira as profit.
So the monthly profit will be 5,000 x30 = 150,000niara
If your location is right, you can expect as high as, 20 to 30 people a day.
A filled cooking gas cylinder is expected to last for at least a month that’s if the person barely cooks. but if it is someone who cooks a lot, it is expected to last for a minimum of 2 weeks.
Meaning, you are rest assured that the probability of your customers coming back that same month for another refill is high. That also implies that you will be making more than 150k monthly.
Note: Due to the consistent fluctuations of Gas prices in Nigeria, the quotation I used in my calculation might be wrong at the time you are reading this article. But your profit is always sure to be N500 and above per every 12.5kg refill no matter the gas price.
How to Start the Cooking Gas Refilling Business in Nigeria
You can start this business with as low as 300,000 Naira on a small scale and in one month you can recoup as high as 150,000 Naira as profit which gives you a 50% return in one month.
Very few businesses can give you a 50% return in one month, which makes it a very profitable business to engage in.
But if you intend to go on a Large scale, N5,000,000 to N10,000,000 will be able to start this business successfully.
In Location, there is one most important thing you must consider, or else you will be wasting your time doing this business.
When it comes to finding the right location for this business, the first thing that comes to people’s minds is to look for the busiest area to set up their cooking gas business.
That might work for those who want to set up a Gas plant business but not a retail LPG business
If you stick to that mentality, you might end up missing out on the lucrative aspect of this business.
Such a place will give you publicity as a retail cooking gas business owner, not money. And that is not the aim of any businessman.
The question now is where can we set up our cooking gas business?
An area that is residentially dense is the best place to set up your cooking gas business.
Meaning your location necessary doesn’t need where there are other businesses, all it needs is where people reside.
The surprising thing about this business is, where people reside more is often the less busy or even most quiet place.
Even with the quietness, it has more potential to provide you with the maximum profit you desire than those busy areas.
How to spot an excellent location for your cooking gas business?
- Must be Residential
- Where there is no land space or very little land space not occupied by residential buildings.
- Make sure People live in that location because there are some residential locations with many houses, but few occupants.
Emphasizing number 3, there are some locations; “mostly newly developed areas”, where you see endless numbers of completed buildings, furnished but no occupant.
Areas such as that have the potential to bring in high profit but the only price you will have to pay is; “patience”.
The reason why is patience is that it can only be profitable to your business when people start occupying those houses.
But if you want instant cash flow in this business, I advise you don’t set up in such an area, as it will yield little or no returns.
Important advice; “this is not a recharge card business you do under an umbrella, (like I see some people do in Lagos). You must have a shop even if it’s just a caravan.
The reason is that your gas cylinders need to be kept safe in a place after closing for the day. Not on a to and fro transportation (from house to your business location) every day.
3. Buying your Gas from the depot
It is one thing to buy gas and another to sell.
So as a retail seller that you are, you must recognize that you are also a customer to direct dealers.
There are several gas depots you can get your refill from and they are very easy to locate due to their obvious gas plants.
And besides, petrol stations are now in the gas depot business. So in case, you are finding it difficult to locate a depot, you can locate a filling station that has a substation for cooking gas to get a refill.
4. Knowledge of Operation
After those whole areas have been touched, 4 basic knowledge are important, and without them, it is impossible to even begin this business.
- How to Fill gas cylinders
- How to refill gas cylinders
- How to transfer gas from one cylinder to another
- How to take the exact measurement of a gas Cylinder before and after filling it.
- How to change the cylinder valve
Those 5 things can only be gotten through a one-on-one practical. This means you must look for someone to teach you or someone you can work with for at least a month.
A month of training under someone or working for someone is long enough to learn everything about the cooking gas business.
With all this knowledge put together, you are good to go start your Liquefied petroleum gas (LPG) business in Nigeria as a refiller.
There is a golden rule in business that you must always put in mind;
The only people you can call your customers in business are only returning customers, not first-time customers.
Two major factors play a role in customers returning back to your service; Honesty and not being a greedy businessman.
6. Business Registration
To operate your cooking gas business on a large scale, it is crucial to register it with the Corporate Affairs Commission Of Nigeria (CAC).
This registration will establish your business as legitimate and prevent any potential issues with government authorities.
5. Get your License from the Department of Petroleum Resources (DPR)
Imagine this: You’re ready to kick-start your cooking gas business in Nigeria, but before you can wield that coveted DPR license, there are a few things you need to take care of. Especially if you’re operating on a larger scale, it’s essential to dot all the i’s and cross all the t’s.
So, let’s dive into the nitty-gritty.
First things first, you’ll need to approach the DPR (Department of Petroleum Resources) to obtain a comprehensive copy of the terms and conditions associated with their licensing process.
Now, here’s the exciting part: you have options! You can either visit their office in person, where you’ll get personalized assistance, or head over to their online website for all the essential details at your fingertips.
Now, let’s talk about the prerequisites for obtaining that precious DPR License. Brace yourself, because here’s the checklist:
- You’ll need a police report,
- Fire planning approval,
- State land documentation,
- Physical planning permit, and
- Town planning permit.
Think of it as a collection of golden tickets that will unlock the doors to your cooking gas business.
So, before you can proudly display that DPR License, make sure you’ve covered all your bases. Gather the necessary documents, fulfill the requirements, and remember, the DPR is there to guide you through the process.
So, gear up, aspiring cooking gas entrepreneurs! Take the necessary steps, follow the guidelines, and soon enough, you’ll be on your way to obtaining that sought-after DPR License, propelling your cooking gas business to new heights in Nigeria.
Obtaining insurance for your cooking gas business in Nigeria is highly recommended due to the inherent risks involved.
Having insurance coverage will provide significant assistance in the event of unexpected situations.
The risk involved in the Cooking Gas business
1. Fire Risk
The biggest risk in this business is; “fire explosion”.
But that being the case, it is very rare. In fact, I have not seen a gas station caught up in a fire in Nigeria.
But you must be careful enough to avoid risking this business with anything that can cause a spark of fire.
In addition, the location must be an open place not enclosed. The reason is that in an open field, the gas disseminates faster into the air, preventing it from having the capacity to attract fire.
2. Price fluctuation Risk
Price fluctuation may become a problem mostly for your customers. At first, when you tell them the price has gone up they may feel you want to extort them.
The high price can also affect your profits because there is what we call; “a benchmark in price” in any business.
If your selling price becomes high as a result of the high buying price, it might make your customers seek other sellers to confirm the new price.
And if by any chance, they discover a seller with a lower price it means they are done with you.
So how to overcome this situation is by you sacrificing your 500naira profit. it might mean you lose 200naira out of the 500nair for only that month’s sales.
When other new customers start coming to enquire about the new price and they discover your price is a bit lower than others they will become your own customer.
But the amazing thing is, it doesn’t happen often. In fact, it rarely happens.
I hope you have benefited from this article: “Cooking Gas Business in Nigeria”?
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