Nigeria has a huge gas reserve of 206 trillion cubic feet. But, it only uses 1.3 million metric tons of cooking gas each year. This shows a big chance for entrepreneurs to make money from the cooking gas business as time goes on in Nigeria.
However, people often ask if the gas refilling business is profitable in Nigeria? The short answer is yes. The profitability of the cooking gas retail business is high due to the constant demand and less supply. You can leverage this situation to create a profitable small scale cooking gas business that can make you a huge income.
This guide is well explained in such a way that anyone can simply learn how to start a small scale cooking gas business in Nigeria. It will show you how to get the right permits and licenses, set up your business, and market it well.
The Profitability of Cooking Gas Business in Nigeria
The cooking gas business in Nigeria is quite profitable as many people prefer it for cooking because it’s easy to use and affordable. With more people moving to cities, the need for cooking gas keeps going up.
A small cooking gas refill shop can earn about ₦450,000 monthly. This is by selling 30 cylinders at a profit of ₦15,000 each or even more, depending on your shop location.
The current price of 1 kg of cooking gas is about ₦1100, sold at ₦1300. This leaves a profit of ₦200 per kilogram. This sums up to a monthly profit of around ₦2,500,000 if better marketing is carried out.
I’m not capping, this is reality!
You just have to have the knowledge that making money from gas business depends on things like where you are, how many customers you get per day, how well you run things, and handling market changes and safety issues.
Having known how profitable the cooking gas business is, let’s see how much it costs to set up a small scale gas station in Nigeria.
Cost and Initial Investment Required
The cost to set up a small refill shop is between ₦300,000 to ₦1,000,000. This includes renting a commercial space, buying gas cylinders, regulators, hoses, safety gear, and the first stock of gas cylinders.
Let’s break down the cost involved for a small scale gas business:
- One 50kg gas cylinder = N150, 000 NGN
- Buying your initial gas = N65, 000
- Indicator for gas level = N2000 NGN
- Digital scale for refilling = N30,000 NGN
- Fire Extinguisher = N20,000 NGN
- Renting a shop = N50, 000/year (approx)
- Other refilling tools = N30, 000
TOTAL = 365, 000
For a full gas refill station, the cost can go from ₦1,000,000 to ₦5,000,000 or more. This depends on the station’s size and location.
Whether it’s a small refill shop or a big gas refill station, the initial investment is always big. But, with good planning and management, the cooking gas business is very profitable and you would enjoy it.
Having said these, let’s continue to the main point of this article where we’ll demystify how to start a small-scale cooking gas business in Nigeria.
Steps to start a small scale cooking gas business
First, research the cooking gas industry well. The cooking gas industry is a complex one. It is definitely more than what you see or think about.
By complexity, I mean you should understand the market trend because it is an economical based business and you would not want to sell your gas at lower than necessary.
The cooking gas market in Nigeria changes a lot. Government policies, like higher cooking gas prices, can affect demand and your profits. So it is important to keep up with market trends to stay successful.
Understand market trends, find out who your competitors are if you would be setting up in an already established area, and create a detailed business plan.
Use AI models like ChatGPT or Google Gemini to write a Mini gas plant business plan. A business plan helps you make smart choices and plan well.
Then, get all the needed permits and licenses especially from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
You would get other permits from places like the Department of Petroleum Resources (DPR), environmental agencies, fire service departments, and local government authorities.
If you do not comply with these regulatory bodies, it can lead to legal problems and hurt your business. Ensure compliance with safety regulations and also put some standards in place to prevent accidents and ensure the safe handling and storage of cooking gas.
Choosing the right place for your business is important. Look for a spot close to homes, easy to get to, visible, and big enough. Set up your shop or station with things like gas cylinders, regulators, hoses, scales, safety gear, and signs.
Getting a steady supply of cooking gas is vital. Work with trusted gas suppliers or distributors to keep your business supplied. Also, hire and train good staff. This includes sales reps, technicians (if necessary), drivers (if you plan to supply homes or otherwise), and others.
Finally, create a strong marketing plan to promote your business and draw in customers. Use both old and new ways to advertise.
While social media marketing might not be a good thing for a small scale gas business, a local advertisement would do better. Place banners within your locality and also encourage customers to refer you to their friends. The secret to this is rendering good service to your customers.
By doing these things, you can start a successful small cooking gas business in Nigeria. This way, you can make the most of the growing need for this important item.
Challenges and Risks in Cooking Gas Business
The cooking gas business in Nigeria can be profitable but comes with challenges and risks. Starting your own small-scale cooking gas business requires knowing these risks and how to handle them.
Safety risks are a big concern in this business. Liquefied petroleum gas (LPG) is highly flammable, which means there’s a risk of fire and explosions. It’s important to have safety rules, quality equipment, and train your employees well to avoid accidents.
Dealing with regulatory bodies can be hard and time-consuming. You need to get permits, licenses, and follow safety rules set by agencies like the DPR and local authorities.
There’s also a lot of fierce competition in the cooking gas market. With more companies joining, you need to find ways to stand out and keep customers coming back.
Supply chain disruptions can also be a problem. Issues with getting gas or problems with suppliers can disrupt your business and upset customers. Having multiple suppliers and good relationships with distributors can help you avoid these issues.
What equipment is needed to start a gas business?
Starting a mini gas plant business in Nigeria means you need the right equipment.
For filling customers’ cylinders, you’ll use a 50kg gas cylinder, chain conveyor, gas level indicator, a filling carousel, digital scale for refilling, and a fire extinguisher.
A digital scale is vital for accurate filling and happy customers. Wireless gauges and level indicators keep an eye on tank levels.
Other must-haves include LPG meters, gas compressors, and pumps for liquid LPG. You’ll also need filters, evaporators, nozzles, and hoses. And, don’t forget an office, fire-resistant fencing, and a safe filling shed. These are key for a safe and legal cooking gas business.
Conclusion
The Nigerian market for cooking gas is big, with over 70% of people using it for cooking. Entrepreneurs can make the most of this by understanding the rules, getting the right investments, and focusing on customers.
Using modern equipment and efficient networks can help stand out from others.
But, there are challenges like finding money, dealing with policy changes, and fixing infrastructure issues. These must be managed to keep the business going long-term.
Planning well, reducing risks, and focusing on doing things right are key to success. By using these strategies, you can harness the cooking gas industry in Nigeria.
If you need further assistance to start your business, do not hesitate to reach out to us via our contact us page.
Frequently Ask Questions (FAQ)
How much does a gas station make per day in Nigeria?
In Nigeria, a gas station can make up to 100,000k per day as profit depending on the actual cooking gas demand for that area. So the profit margin is totally dependent on rate at which daily gas refilling process takes place.
