Dear Buddy,

over the last couple of weeks, I have been getting kind words from entrepreneurs and investors on how our articles have been expanding their knowledge base about the African Gas Industry using Nigeria as a focus. They are really keen on action steps to take if they want to proceed with investment in the sector. This is what is forming the basis of my article today, to show you how Kiakiagas Limited helps you make sound business decisions and guide you through the hurdles of investing in the Nigerian LPG Industry. 

As you walk across Nigeria today, you will observe a new trend of LPG plants popping up all around in petroleum filling stations, small land spaces, Major Plants, Bulk terminals are coming up, increased number of LPG trucks on the road and many write-ups are littered across the internet about the LPG industry, this is as a result of many individuals that are shifting from kerosene and to using cooking gas. The major challenge for the old and new consumers of gas is the fact that the gas plants are not close enough for them which creates a vacuum which entrepreneurs can take advantage of and create value in the sector by brings gas closer to the consumers.

The LPG industry in Nigeria has a value of NGN152 billion ($500Million) with less than 10% already being harnessed. Nigeria is at that point we were in the 1970's when the populace made a massive switch from firewood to kerosene stoves because it was the most convenient domestic fuel at that time. 

Dear budding Entrepreneur, if there is anywhere to invest in Nigeria for now is the LPG Industry because it is not a seasonal product and it is a constant domestic requirement for homes and industries.

The KiaKiaGas Solution

Kiakiagas.com is an integrated energy solutions company with focus on Gases. We have competence in LPG/LNG/CNG retailing, distribution& logistics, Construction and Installation of Gas Facilities, Market research and Building profitable Gas businesses.

Our integrated support system guarantees that we get a profitable location to set up your business, get trading licenses for you to trade in the business, Construct and safely install your LPG plants for you, train you and your management staff on how to manage and run your plant, offer after sales support to make your business profitable and guarantee quick return on investment. 

 LPG INVESTMENT OPPORTUNITIES ACROSS THE VALUE CHAIN

There is different opportunities across the LPG Industry in Nigeria,

a)   LPG Bulk Terminal Storage: this was extensively discussed in my last article, click this link in-case you missed it http://www.kiakiagas.com/blog/retail-lpg-pricing-nigeria to understand the opportunities that are in this segment of the industry.

b)   LPG Retailing: this was extensively discussed in my last article, click this link in-case you missed it http://www.kiakiagas.com/blog/retail-lpg-pricing-nigeria to understand the opportunities that are in this segment of the Industry

c)   LPG Distribution and Logistics: I have not discussed this, I will just touch it a little. In 2016, Nigeria consumed 500,000Mt (500,000,000kg) of gas. This translates to a monthly average consumption of 41,000Metric tonnes (i.e 41million Kg of gas). The standard used to measure trucking at the loading depot is 20MT truck (1.e20, 000kg), the detailed report is in our logistics business plan.

d)   Production of cylinders and cookers: There is massive opportunity in this area, as there is no functional LPG cylinder manufacturing facility in Nigeria, you can request for the business plan on this opportunity

For this article we would be focusing on the retail end of the value chain

BUSINESS INVESTMENT ACTION STEPS

1.    BUSINESS FEASIBILITY INTELLIGENCE REPORT

our business feasibility report is a must have if you must succeed and make a fortune in this business. The report is a quarterly updated working intelligence document that will be updated to you once you subscribe to help you keep in touch with current realities on ground and help you make decisions that would guide your business to profitability.

The Plan includes:

Business Overview

Marketing Plan

Production Plan

Organizational and Management Plan

Financial Plan

Risk Analysis and SWOT analysis

Quarterly business intelligent update 

For those that do not have the money now to start up, the plan is a must have when seeking for a loan from any bank in Nigeria or attract investors. 

2.    LPG PLANT VARIATIONS

LPG Retail Plant Sizes that Kiakiagas in collaboration with our foreign technical partners can set-up for you

1.      2.5tonnes mini plant

2.      5 tonnes mini plant

3.      10tonnes Mini plant

4.      20-100tons stationary plant

5.      100-500 tons stationary plant

THE PPEs that comes with the Facility:

1. LPG tank

2. LPG fire proof Pumps

3. Filling Heads customized for the Nigerian Market

4. Weighing scales

5. Pressure gauge

6. Return Hose

7. Fire extinguishers

8. Safety Overalls

9. Safety boots

10. Safety gloves

11. Safety goggles

13. Safety caution signage’s

14. Free HSE training on how to manage the plant

15. Free haulage to anywhere in Nigeria

3. BUSINESS LOCATION

We have partnerships with major service stations and realtors across Nigeria which guarantees a space in a profitable location to set up your plant

4. LPG OPERATING AND TRADING LICENSE 

Our extensive network with DPR and other regulatory agencies enables us secure operating licenses for you to trade LPG in the quickest possible time.

5. PROFITABILITY ANALYSIS OF YOUR BUSINESS

We would do a quick analysis using the smallest possible LPG facility 2.5Metric tonnes or a 5,000 litres storage capacity.

The gas supply will be in lots of 5 tons using the small road tankers which will source the product directly from the Depot. With the right location and marketing an entrepreneur will conveniently sell 2.5 tonnes per week, which will amount to the entrepreneur doing 10 tonnes a month.

The pricing

The current price of gas at the depot is NGN4, 500,000 ($14,377) for 20 tons, divide by 8 to get the price of a 2.5MT which is NGN562,500 ($1797).

S/N Item Amount (NGN) Amount(USD)

01 Cost of 2.5tons from the depot 562,500 1797

02 Cost of Logistics (Lagos) 80,000 255.59

03 Nupeng Dues at the Depot 14,500 46.33

04 Total cost to land a 2.5 tons load of gas 657,000 2,099.07

05 Cost per Kg (divide the total cost by 2500kg) 262.8 0.84

06 Landing cost of a standard 12.5kg cylinder 3285 10.50

To get the Margin per Kg is calculated to be:

The prevailing price for gas in lagos is NGN4500 ($14.38) per 12.5kg cylinder size currently that is;

NGN4500/12.5kg = NGN360 ($1.15) per KG

the Margin is NGN360 ($1.15) (selling price) – NGN262.8 ($0.84) (landing cost) = NGN97.2 ($0.31) per KG

Profit Margin Per 12.5kg = NGN97.2 X 12.5 = NGN1215 ($3.88)

With a conservative projection of 2500kg (200 cylinders) sales per week

2.5 tonnes storage fills 200 12.5kg cylinders.

200 x 4weeks= 800 cylinders per month

at a standard filling rate of N4500 ($14.38) per cylinder gives NGN3, 600,000 ($11,501.76) per month. (Lagos Price)

 At the current landing cost of gas from the depot (lagos location) of NGN3285 ($10.50) per cylinder gives a gross margin of NGN2, 628,000 ($8,396.29) per month. (Prices fluctuate at the depot, which also determines the sales cost to the consumers)

This venture can generate NGN972, 000 ($3,105.48) 000 as gross income a month.

NOTE: This is a conservative projection; actually 2.5tons of gas can be sold daily if the location prospecting and marketing is done right

6. WHY THIS IS YOUR BEST INVESTMENT OPTION

• You own your business

• Your plant is branded in your company Name

• Very low operational cost

• Kiakiagas maintains the plant for you

• Safe and Secure

7. OUR INTEGRATED AFTER SALES SUPPORT

• Management tools (OMS, Gas Sales stock Tracker) to successfully track and run business to make it a profitable

• Full in-house sales support

• Routine Maintenance on the plants

• Steady Supply of Gas to the plant at best competitive prices

• Quarterly HSE and Management Training

• All year round business support and free consultancy

9. THE KIAKIAGAS PROMISE

• Turnkey Business Solution

• Dedicated customer service

• Cheerful training staff

• Assurance and quality check.

For more information call/whatsapp our business development team: +2348085269328 OR send us a mail at: gaspreneur@kiakiagas.com

Best regards

Written by

uwandu ifeanyiFounder/C.E.O at kiakiagas.com (Kiakiagas Gas Limited) Frontier & Emerging Markets Clean Energy Business Expert