Have you ever thought of starting a kerosene business in your area or even supplying it to retailers and companies?
Kerosene is one of the most essential petroleum product in Nigeria and is used extensively in both rural and urban areas. Most homes 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!
Kerosene business is a very lucrative business in Nigeria because a lot of low income Nigerians use kerosene for cooking and lighting up the house via kerosene lanterns.
Currently if you check carefully you will notice that sometimes the price of kerosene will be higher than petrol,that is to show you that the demand for kerosene in Nigeria is high.
This article will show you how to establish and start your own kerosene business in Nigeria.
Why Is Kerosene Business In Nigeria Very Lucrative?
One of the basic reason why you can make money from Kerosene business is due to the high demand for the product caused by the very high population of low income earners in Nigeria. According to research, 11,000,000 litres of Kerosene is said to be consumed everyday and the demand can only get higher due to 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.
Due to it's high demand, Kerosene dealers 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 N150 by the NNPC. From NNPC you can land the product at unit cost of N150 per litre and sell for N200 per litre.
What You Need To Get Into Kerosene Business in Nigeria
Below are some of the Requirements to start up a Kerosene Business in Nigeria:
License & Certification
You will need a license if your planning to start big,i.e making purchases of over 10,000 liters of kerosene,if however your purchase power is below 10,000 liters it will be considered a small scale business and a license wouldn't be required.
If your a going into the business on a large scale,it's imperative to register your business with the Department of Petroleum Resources (DPR) and also the Petroleum Products Marketing Company (PPMC),that way your business will be certified and you can be able to buy your kerosene in wholesale directly from NNPC.
Location
You need a strategic location to sell your products. 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. Some kerosene marketers own filling stations which they use in selling kerosene alongside other petroleum products but if you cannot afford to build yourself a station, you can just set up a depot in a safe place.
Capital
For sure, we all that know Every business requires a start up capital to start. With a sum of N100,000 - N300,000 you can start up and set up a small-scale kerosene business in your neighborhood.
If however you want to start off on a large scale then you will need about 1.5 million - 2 million naira.
Storage Tanks
This is another important aspect.. Underground Storage tanks are most preferable because of it's safety. safe from thieves, reduces the chances of explosion and corrosion, however they are more expensive and this is why surface tanks are commonly used. Surface tanks can be constructed for you depending on the litre capacity you want if you don't want to purchase already made tanks. Inside the Tank should be painted with anti rust paint as kerosene becomes corrosive with exposure to higher temperatures which is what will happen when your tank sits outside everyday. The outside should be painted blue with white lines, which is the color for kerosene storage tanks.
Supplies
This is another crucial aspect of setting up this business. If you do not have products to sell, then you are not involved in the business in the first place. It is important to find and engage reliable suppliers. You can buy from the NNPC or you can get from independent marketers, but be sure that your supplier will be able to deliver products at all times, even in scarcity because this business thrives on continuity. Also, be careful when buying products. Deal with the main people to avoid buying adulterated products which can lead to the withdrawal of your license and possibly face paying huge fines and even prison, as it is against the law to sell adulterated kerosene.
A small scale kerosene dealer can store up to 15,000 liters of kerosene in his/her residential area,but you have to put some safety measures because petroleum products are flammable.
Dispensing Pump
This is needed To make selling of kerosene easier, safer and convenient. if you cannot build a filling station with several dispensing pumps, you can buy one dispensing pump to be using in your mini depot to dispense fuel to your customers.
Sales Attendant(s)
You may need to employ an extra hand(s) to assist in running the business, especially when you are not always around.
It is not advisable to keep the business locked if you are not available especially in the face of competition. It will cost you your customers, so you may need to get an extra hand. However, it is advisable that you go to your business place everyday even if you have an assistant in order to reduce the possibility of theft. Due to the nature of the business, keeping record for every litre sold may very difficult, the only way therefore to prevent theft is to manage it and be there always, otherwise if you are starting very big, then you can employ a manager who is reliable and can keep track of things for you.
If however your a small scale kerosene dealer,then you should consider employing a sales attendant that will be stand by to attend to your customers especially if your located in a residential area that people are in constant need for kerosene.
Experience
Even a lay man knows that he definitely needs this.. In every business,you learn by experience and with time you will be able to adopt good practices that will help you to earn more.
With these few steps of mine above, i should have been able to put you through for you to start up your kerosene Business here in Nigeria..
For those who will like to ask questions and also contribute to our article above, please kindly use the comment box below:
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