Have you been thinking about starting a kerosene business in your area?
Are thinking about supplying kerosene to retailers and companies?
If yes, this article will provide you with the necessary know-how on how to go about it.
It behooves us at this point to give a brief explanation on the concept of kerosene.
Kerosene could be seen as the most essential petroleum product in Nigeria and is used extensively in both rural
And urban areas.
A good number of people in Nigeria make use of Kerosene in one way or the other.
So, people always suffer whenever kerosene goes scarce.
This is one of the petroleum products in Nigeria that generate massive income for the oil and gas businesspersons.
You will agree with that a lot of people are making millions of naira in the business every day.
I bet you that this business worth investing into.
It is very lucrative that you can make your entire investment capital back from your first month sales.
See also: Petroleum Engineering
8 Tips to Start Kerosene Business in Nigeria
Why Is Kerosene Business in Nigeria Very Lucrative?
One simple reason for the profitability of Kerosene is the high demand for the product occasioned by the very high population of low income earners in Nigeria.
The estimate of about 11,000,000 litres of Kerosene is said to be consumed.
Or daily basis and the demand can only get higher due the ever increase in population.
The erratic power supply in Nigeria also make the business lucrative.
A lot of homes depend heavily on Kerosene for their cooking.
And other home energy related purposes and simply cannot do with the product.
Again, kerosene is a product of high demand.
Most dealers make quick sales and return for another round of supply.
So, you can see that it is a lucrative business.
The difference 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 kerosene
But the dealers knows exactly and are cashing on peoples ignorance to make huge profit even if it is unfair.
Take a Look at this Analysis
The official selling price by the NNPC is about 50 Naira only.
You can buy the product from NNPC at unit cost of N50 per litre and sell for N100 per litre.
Just know your way that is what filling station owners and other dealers do.
Though I don’t support sharp practices
And taking advantage of people’s ignorance but that is not my duty to control,
It is the duty of the Government and the price regulatory body.
Let us say, for example, that you purchase say 20,000 litres at N50 per litre of Kerosene from let’s say,
The NNPC or any other major Kerosene dealer(s) Such as Total or Capital Oil. You would sell this at N100 per litre.
It means therefore that you at least N50 per each litre sold.
Your overall gain on the 20, 000 litres bought would then be N50 x 20,000 = N1, 000,000.
What You Need to Get Into Kerosene Business in Nigeria.
Trading on kerosene is one of the easiest business to start.
The capital requirement is very minimal compared to other oil and gas related businesses.
The whole thing may not cost more than N700,000 at most N1,000,000 depending on the level you want to start from.
Here are some of the things you should consider before getting started
See also: 8 Tips to Start Kerosene Business in Nigeria
1. Ensure a Proper Business Location
First, you will need a business place or location where you can put your tank since the sale will be from the surface tank.
Make sure you look for a place where you where there is reasonable population of people.
It could be in front your resident or the nearest major road side.
Just budget maximum of N30, 000 for that.
2. Get a Surface Tank:
Look for a good welder to construct a very good surface tank for you.
Ensure that you construct 10,000 litres volume tank but let them make it 10,500 litres to be able to accommodate all your Kerosene.
You could do 15,000 litres if you want.
Ensure that the tank is welded properly so as to guard against leakages.
Be sure also, that both inside and outside are coated against rust, the welder will do that as well.
Start Kerosene Business Nigeria
3. Source For and Stock Your Kerosene:
NNPC controls about 40% of the sales,
While Independent Marketers controls more than 60% of Kerosene sales through the Pipeline.
And Product Marketing Company, a subsidiary of NNPC.
You can buy directly from the source.
You could get the product from other Independent marketers, Capital Oil Ltd and the rest.
There are other numerous sources where you can buy Kerosene but beware of adulterated product.
You will be found wanted if the Kerosene get exploded in people’s home.
See also: How To Start Diesel Supply
4. Get a kerosene Sales Attendant:
in order to run your business effectively, you need to employ a good sales attendant.
Yes! Employ someone with basic book keeping knowledge to attend to your clients.
This should be a person who can effectively monitor the sales activities daily.
Also, the sale attendant will help you to keep an inventory of your supplies.
5. Marketing Strategies:
A good idea of marketing strategies suited to the location of your business is necessary for to succeed.
A couple of people recommend a form of mentor ship or internship for a brief period before launches his business.
So, he can study the market survey and adequately develop ideas that will help to build his own business successfully.
Start Kerosene Business Nigeria
6. Get Proper Licensing from Government:
For those retailing below 10,000 liters of kerosene,
The law exempts you from any form of licensing.
Nevertheless, when you are retailing above 10,000 liters,
You are required to get some form of license as the business is no longer referred to as a small scale business.
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7. Acquire Kerosene Measuring Units:
Make sure you know unit of measurement in order to sell your product.
Look for a better unit of measurement in your location and stick to it.
Ensure that your measures are accurate
And that you do not engage in sharp practices that may deprive your clients of the true value of their money.
Though some locations sell kerosene per liter,
While some sell using bottles as their standard measure and offering units such as full bottle, half bottle and so on.
It has been projected that an average of between N10 and N25 could be made on each liter of Kerosene you sell
And even more during periods of scarcity.
For instance, there was scarcity of kerosene across the nation in December 2016.
Even to the extent of N250 per liter and retailers resold at about N300 per liter.
See also: 5 Important Note For Gas Cooking
8. Be Dedicated, Devoted and Innovative in This Business
like every other business, the sale of kerosene has its own risks and challenges, however, you are assured of a great investment if you put hard work.
For this business to succeed, you need to give it maximum dedication.
You have to a lot it premium levels of devotion too.
Yes! walk towards developing nice strategies which would put you far ahead of your competitors in this business.
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