How To Start Diesel Supply Business
How To Start Diesel Supply Business. Oil and gas business is one of the most profitable businesses. People made limitless amounts of money from this business.
Automated Gas Oil Supply is one of the most money-making businesses in the Nigerian oil and gas industry.
For quite some time now, this business venture has been on my mind.
This prompted me to dig deep around to find some useful facts that will enable the set-up of this business with ease. Therefore, I am going to share the findings with you so that you too can tap from the wealth in this sector.
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Why Diesel Supply Is a Good Business
Presently, the power supply in this country is nothing to write home about.
All the giant diesel generators that power most of our industries run on diesel.
More than 6,000 diesel generators that power all the MTN’s base stations across the country and they run on average of 20 hours daily.
If each of those generators consumed 40 liters for the 20 hours daily, that will be a total of 40 x 6000 = 240,000 Litres of diesel daily! In a month, MTN’s generators alone would have consumed 240,000 x 30 = 7,200,000 Litres of Diesel. What a waste!
This means that the four GSM Network operators in Nigeria would have consumed 7,200,000 x 4 = 28,800,000 Litres of Diesel per month. Again, all the twenty-one listed banks and their branches, all the factories, all the agencies and organizations, all the media houses, and all the homes that run almost 24 hours on generators! It is clear that billions of liters of Diesel are burnt every day in Nigeria.
A high-demand product is the best product to deal with. The high demand for AGO makes diesel products one of the very products of choice when it comes to the Nigerian oil and gas supply business.
Also, the Diesel supply business is less complicated and less expensive compared to that of PMS. This is because Diesel is easier to store and transport because it is less flammable, unlike PMS that could catch fire from a distance, and requires a more elaborate storage system that costs a fortune.
One of the best parts of the business is that you basically do not need to store the product, all you need to do is to market your customers and supply on-demand, cash your money, and smile to the bank. You can even do the business on a small scale without keeping an office. However, to operate on the standard we are talking about, you must get an office. Don’t get me wrong – The diesel business is a serious business and requires careful planning.
Millions of naira waiting for you in this business, if you get it right believe me. The issue of returns is like 120% guaranteed. Go ahead and invest provided you have the required capital.
Profit Potential in Diesel Supply Business
The supply of Diesel is a lucrative business venture in the Nigerian oil and gas industry. There is money in Diesel supply and profit is always there. The basis for our calculation is per liters and per truck. You can get 40,000 liters of Diesel from major distributors and NNPC at 3.6 million nairas at the unit cost of 90 nairas per liters.
For instance, the supply of 40,000 liters of Diesel to retailers like Filling Stations at a unit cost of 100 nairas will give you a profit margin of 10 nairas. In that case, you will be generating a profit of 40,000 x N10 = N400, 000 from each supply. That is the lowest profit you can make – profits for 40,000 liters are sometimes up to a million naira.
Marketing is essential in the Supply of Automated Gas Oil. It is the secret to success in the diesel supply business. As a supplier, you have to expand your horizon, talk to as many companies and individuals as you possibly can. Thus, the Supply of Automated Gas Oil has direct proportional relation with the returns.
Conclusively, a medium-scale Diesel supplier that puts everything properly in place makes between 3-5 million naira monthly after expenses. Isn’t that great? A good business by all standards should yield 5 million nairas monthly. It is by no means the final figures, prices can change and some other factor may come into play. However, everything remains relatively within the estimated range.
If you have additional information you think will add more meaning to this article, feel free to explain it in the comment section and let us expand the topic.
Requirements to Start Diesel Supply Business
The requirements I’m talking about is the things you need to put in place to ensure a smooth starting of your business. Let us take it one after the other and see how it goes.
1. Business Registration: it is very important to register your business either as a Business or Private Limited Company. This is very important in your business. Some companies may not want to deal with the non-traceable individual. If you don’t have a registered company, you may lose out on their deals. When a company is registered and with a permanent office, people feel more relaxed to do business with you because they know a place they can fall back to should they need to contact you physically at any time. That is very important in business.
Also, you have a place you refer people back to when negotiating a deal, something like – My Company is Dandy Oil and Gas Ltd. Our office is at No. 12 Aba road. Then people know you are serious in business. It cost about N50, 000 to register a Private Limited Liability Company with the Corporate Affairs Commission.
2. Invest in Brand Equity: This is really not a formal requirement but very crucial if you hope to Stay Ahead of Competition in your business. Your name does not make much impression as your brand, it is the brand that people get attached to in any business. When you think of MTN. The Yellow square logo makes MTN unique.
In this part of the world, people tend to look down on branding while some do it very poorly. Branding is even more important than the business itself, good branding will go a long way to lift your business.
Get professional Graphic artists and brand experts to work on your company’s brand. Let them design a professional logo for you and other things like your company letterhead, business cards, and stationery. Open a corporate account with your registered company’s name, etc. These are very important in any business too.
The necessity of all these in your Diesel supply venture is such that when you have to need to submit a business proposal on this to your intended clients, virtually everything will have a professional look. The importance of this is that it helps make a very good impression at first sighting which is key for winning contracts.
- Buy your Truck– It is always possible to rent one from a number of haulage companies. However, buying yours is more beneficial and cost-effective at the long run. It cost about 9Million Naira to get a good trailer/truck head from some parts of Germany or anywhere else in Europe. If you can’t get one, go for hire while you save money and buy later
Source for Diesel Supply Product
There are two major places to buy your product: From Major distributors like Mobil, Texaco, Oando, Total, Conoil, etc… They are major importers of the product and are always looking for distributors. In most cases, they always have the products available though at a higher price.
The second one is NNPC. They are like the ultimate in terms of prices but not for availability anyway. Approach these two major sources and negotiate your way.
Zenon oil is the ultimate when it comes to Diesel importation in Nigeria. You can buy your product from Zenon.
Latest Trend! The product is very cheaper in the Niger Republic. Some importers of fuel obtain their product from the Soraz refinery located in Niger at a cheaper rate and then resell same to distributors within the Northern part of the country. With your own truck and logistics, you may give it a try, buying from them up North at a cheaper rate especially if you are from the North. Otherwise, you may just make do with the others (Zenon, NNPC, and Major Distributors) for convenience and security.
Once you have the product aspect covered, your major assignment is marketing. Reach out to potential buyers. Make advert on the daily newspapers and online.
Now throw your questions and add what you know into the comment box and let’s expand on this post. Success is yours in your journey to become a Supplier of Diesel oil products.
If you need a complete business plan, please let us know. Or, you want us to help you set up this business, kindly contact us. Otherwise, please check out these other business ideas you can do
Good day to you,
What a great write up for us who wants to go into the business. Thank you so much for this enlightening information.
i will like to ask if it is possible to buy directly from a tank farm?
After reading your article, i checked with some major marketer and the price given ranges between 169-190naira. I will like your advise on this.
Thank you for your anticipated response.
Thanks, please read on Top 14 Ways to Plan and Establish new Business in Nigeria for more idea
What an educative article sir! I have honestly learnt more God bless you sir.
Meanwhile for any quantity of a quality diesel delivery and supply at a very cheap price call or test
Brilliant one sir :
I’m intoo oil and gas sir,this my 4years in oil and gas, has a transporter,I can provide you any litres of trucks for transporting your diseal too your customer s destinations in Nigeria.