Cooking Gas (LPG) Retail Business

TABLE OF CONTENT

Page
Introduction & Terms of Reference – – – – 2
Executive Summary – – – – – – 3
Nature of Gas plant Business Plan/Feasibility Study – – – 4
Direct Cost & Operational Expenses – – – 9
Revenue – – – – – – – 10
Expenditure/Capital Cost – – – – – 10
Plant Operation/List of Equipment – – – – 11
Shares Capital – – – – – – 14
Organization & Management – – – – – 15
Projected Balance Sheet – – – – – 16
Profitability Projection – – – – – 17
Cash Flow Projection – – – – – 19
Calculation of Loan Repayment & Interest – – – 21
Notes to Accounts & Projection – – – – 32

LIST OF TABLES
Calculation of Monthly Loan Repayment, Processing Fees, Management
Fees and Interest – – – – 22
Fixed Asset and Depreciation Computation – – 24
Direct Cost Estimate for years 1 – 5 – – – 29
Operational Cost for years 1 – 5 – – – 30

TO GET THE COMPLETE LPG / COOKING GAS BUSINESS PLAN (INCLUDING THE FINANCIAL PROJECTIONS AND ALL). Pay N20,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

After payment text your name, your e-mail address and bank teller number to 08060565721 and you’ll receive your COOKING GAS / LPG FILLING STATION BUSINESS PLAN

INTRODUCTION
The company XYZ is a private limited liability company Incorporated and registered on 9th September, 2002 with the Corporate Affairs commission (CAC). The company intends to expand it’s existing business of Gas production, marketing and haulage.
The expansion is on the premise of securing N40million loan facility from Fidelity Bank Plc. At a meeting between the client/directors and our firm – ABC, it was agreed that the necessary information and data should be compiled to produce a feasibility/business plan to determine the viability of the project/facility.

TERMS OF REFERENCE
The objectives of this Gas Plant Business Plan / Feasibility Study are :
To evaluate the operational profitability of the facility and hence expand the business of the company beyond it’s present level.
To determine the ability of the company to pay back the loan within the stipulated period.

Though our analysis in this report is restricted to only gaseous oxygen and gaseous nitrogen sales, it should be noted that there are other by products that will also generate revenue to the company.

 

EXECUTIVE SUMMARY OF THE LIQUEFIED PETROLEUM GAS (LPG) PLANT STATION BUSINESS

This study is in respect of an existing Company whose prime objective of operation is the production of gaseous oxygen/gaseous nitrogen, processing, marketing and haulage.
The products of the company are distributed to the general public for use of cooking and to companies for industrial use.
The study is to evaluate the viability of the loan to expand the present level of the company’s operation.
From the study/projection, the viability of the project has been established as the company will be able to pay back the loan within twenty four (24) months.
There is high profit margin from year 1 increasing by a slight percentage to 5 years.
The Assets has been increase from N24,583,030 to M55,941,813 at the close of years 5
Within the five years plan, the company will require Fixed Assets/Equipments amounting to forty million naira N40,000,000 or more to assist in business expansion.
The liquidity profile is equally very encouraging with a cash balance of N462,871,000 at 31st December year 5.

 

NATURE OF COOKING GAS PLANT

The plan/study is prepared on behalf of XYZ to assess/evaluate the viability of securing a loan facility from Fidelity Bank Plc.

PERSONNEL

Man power will be obtained locally and the staff strength for the company is about 26 persons. The details are provided in the body of the report.

MARKET ANALYSIS

Oxygen and nitrogen are in vest amounts in the earth’s atmosphere with availability put in the order of about 21% and 78% gases respectively.
Oxygen is produced by air separation processes that use either cryogenic liquefaction and distillation or vacuum swing adsorption (VSA) separation. It can be stored and shipped as either gas or cryogenic liquid.
The principal uses of oxygen stem from its strong oxidizing and life-sustaining properties. It is used in medicine for therapeutic purpose and in the metals industry for steelmaking and metal cutting applications
Oxygen for the fabrication sector focuses on the needs of customers who weld, cut, shape, coat or teat metals and materials.
Typical customers include those in the automotive (component supplies, assemblers, manufacturers, repairs and maintenance suppliers) construction, general manufacturing.

In the chemical and petroleum industries, oxygen is used in the production of a wide variety of fuels and chemicals.
Oxygen is used in the pulp and paper industries for a variety of applications.
In the glass industry, oxygen/fuel combustion is used to reduce particulate and NOX emissions in melting operations.
Nitrogen also has many industrial uses in the reduce particulate and NOX emissions in melting operations.
Nitrogen also has many industrial uses in the gaseous forms which include the liquid nitrogen, which is extremely col. Items that must be frozen to extremely low temperatures for preservation are frequently stored in liquid nitrogen, which is extremely cold. Items that must be frozen to extremely low temperature and pressure, it is used as the air in the inert welding atmospheres.
Foods, documents and chemicals are sometimes stored in nitrogen to keep them from oxidizing or reacting with air or water.
The list of users for the two products speaks volumes on the nature and size of the market,. This is even so when one considers the few industrial gas plants in the country today compared to the demand for these products. Benin City where XYZ plants are located is well positioned to serve the large market in Delta, Anambra, Kogi, Ondo and Ekiti States. The largest consumers of oxygen today in this zones are “panel beaters” and metal fabricators generally, and this class of consumers are highly concentrated in the target geographical area where this company is a household name with a reasonable level of market share which have been achieved as a result of customer satisfaction and confidence over the years of the company’s operation in the area.

MAIN COMPETITORS

The main competitors in the industrial gases market in the region include; BOC gases, Air liquid NIG. Plc, IGL (all in Warri and Port Harcourt).
However there are small capacity plants with capacities not exceeding 60cu.m/hr of oxygen. Stiff competition is not observed among them because the market is large and very far from saturation. Each thrives in its own market niche and there is no dominance observed so far among the various gas plants.

HEALTHY SAFETY AND ENVIRONMENTAL POLICY

XYZ has a strong commitment to safety. The company as such operates within clearly defined health, safety and environmental rules. An average work environment is hazardous and this hazard vary from one environment to the other in relation to the kind of job been carried out. This made it necessary to constantly expose personnel to safety department
With the right attitude at XYZ believe that all accident are avoidable. Only fully medically examined personnel are allowed in their work environment. Our safety department trained and qualify personnel know what induction to give and what Personnel Protective Equipment (PPE) to provide for every job.
With an healthy staff, with adequate safety orientation having the right type of qualification and experience working in a safety certified environment and follows strict safety instruction, the company get minimum near misses and managed always to avoid accident.

ENVIRONMENTAL IMPACT ASSESSMENT for the cooking gas business

An environmental impact assessment is an assessment of the possible positive or negative impact that a proposed project may have on the environment, together consisting of the natural, social and economic aspects.
The purpose of the assessment is to ensure that decision makers consider the ensuing environmental impacts when deciding whether to proceed with a project.

ENVIRONMENTAL ISSUES AND ASSESSMENT

Environmental issues are becoming increasingly important in the business world. Companies have become responsible for the environmental impacts of their operations and therefore they are now more aware of problems such as carbon emissions etc.
The growth of environmental issues and regulations has also brought greater focus on how businesses manage environmental issues.

MANAGING ENVIRONMENTAL ISSUES

Environmental issues are important to businesses for a number of reasons
Ensuring Compliance wi9th regulatory standards
Ensuring that environmental issues are adequately managed by companies etc.
Ensuring the safety of people that lived in the environment
A regular review of interactions with the environment, the degree of impact and also the impact of forthcoming major investments
Minimizing waste or better still eliminate or possibility of recycling or selling waste.

At XYZ, environmental issues are taken seriously and the impact of the company’s product to the environment is not damaging as the company’s product i.e. nitrogen & oxygen gas depends on air as part of its basic raw materials.
The company has a well defined plan of action on the management of environmental issues as part of its policy. The company as part of its plan intends to develop a modern detector that helps to detect when there is leakages in the company’s storage tank and cylinders so as to reduce then negative impact it may have on the environment.

TO GET THE COMPLETE LPG / COOKING GAS BUSINESS PLAN (INCLUDING THE FINANCIAL PROJECTIONS AND ALL). Pay N20,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

After payment text your name, your e-mail address and bank teller number to 08060565721 and you’ll receive your COOKING GAS / LPG FILLING STATION BUSINESS PLAN

 

The use of cooking gas by Nigerians has increased from 110,000MT in 2013 to 400,000MT in 2016. This implies that there is an increasing demand for cooking gas in Nigeria and investing in cooking gas business is very promising. 

It is not a disputable fact that Nigeria is  one of the oil producing countries in the world and a greater percentage of her revenue from oil. Did you know that gas is a by-product of petroleum and until recently was greatly underestimated? According to statistics just about 5% of consumption potential of LPG was used.

However this is no more obtainable.  A lot of people are now aware of the usefulness and convenience of making use of cooking gas. People would have preferred using electricity but due to the lack of steady power supply most persons don’t make use of electricity for cooking.  Kerosene stoves were the other option but the problems associated with this one is that it is expensive,  stressful and creates soot which is difficult to clean.  This now leaves the use of cooking gas standing. Most people prefer using cooking gas because it is cheaper, faster, easier and more convenient.

What all this implies is that there is a high demand and ready market for cooking gas in the country which makes it a lucrative business to engage in. Notwithstanding the current recession,  this demand remains because feeding is a basic necessity and people still need to cook their food.

HOW TO START COOKING GAS BUSINESS

There are a few things that you have to take cognizance of before you start the cooking gas business. They are as follows:

Get a Cooking Gas LPG Business Intelligence Report

:

For your business to be a success,  you need to have a substantial knowledge about it. Your knowledge base allows you to make concrete plans and execute them properly. For instance you need to be aware of the number of gas plants in the area you are targeting , their average turn-around time,etc so that you’ll make plans and working strategies to advertise yourself. You’ll equally need to  the dos and don’ts of the business and a good way to learn about this is from the experiences of others who got into the  business before you.

Land: The issue of land when it concerns a cooking gas business is not a trivial matter as a result of the fact that there are environmental and health implications of cooking gas. Hence, in accordance with DPR (Department of Petroleum Resources) directive, a gas plant must be located at least 15meters from any building that has flammable materials, such as residential buildings, filling shed etc. As a matter of fact before you can get your licence and before your application can be approved, the DPR comes for inspection and if the requirements are fulfilled then the licence will be issued.

Capital and Labour: Without a doubt,  every business needs capital and labour, Cooking gas business inclusive. In fact cooking gas business is capital intensive as you’ll need to purchase necessary equipments and machines. The DPR would look out for this as it shows how ready you are for business. Examples of the necessary equipments and machines include; the testing pool, valve screwing, electronic carousel, mechanic carousel, electronic scale, mechanic scale, etc.

You would equally need to employ a number of staff to help you in running the business.

Licensing and Permits: The matter of licensing and issuing of permits is handled by the Department of Petroleum Resources ( DPR) and there are three stages. They are as follows;

Stage One:

Site Suitability Report: This is the first stage. The DPR will visit the site to ascertain if it is okay to be used as a cooking gas filling plant

Required Documents: Documents that would be required before licence can be issued include;

1. The Certificate of Ownership (C/O) of the property or any proof of ownership

2. An application letter for DPR suitability inspection. This has to be addressed to the comptroller of DPR in the particular  state you want to set-up the plant in.

3. A survey plan of the Land

4.The certificate of incorporation and Memorandum of Association of the company.

5.Tax Clearance certificate

6. Location Map of the Land which has to cover 1km adjoining the property to be used

Stage Two:

Approval to construct: When the DPR has given the go ahead order to set up the plant, the next thing to do is to prepare and submit the following documents;

Police Report

Town Planning Permit

Fire Planning Approval

State Land and Physical Planning Permit

Layout drawing of the proposed plant

Carry Out an Environmental Impact Analysis

Stage Three:

Approval to operate: After the first two stages, the last stage is to certify the installation and Materials used to build the establishment. They documents required for this are;

Pressure Test Report

Fire Response Report

SON certification for the pressured vessels

Insurance:  Although Insurance is not compulsory, it is highly recommended, because you are dealing with flammables and there could be unforeseen occurrences.  Despite the fact that precautions and safety measures will be in place, one can never be too careful so to be on the safe side it is best to be insured.

Marketing: You have to advertise your business, and make people aware of it.  This greatly improves customer base and profit margin. If people do not know about your business they will not patronize you so you have to take advertising and creating awareness very seriously and  employ strategies to make it work.  This is very crucial and goes a long way in determining the success of your business so go the extra mile for it. If you can afford it employ staff specifically for this purpose or map out plans to see that people are made aware of your business so that you can get patronage.

More so, it is best to get training from someone already in the business. There are things about the business that you would not know as a freshman so you need someone who has experienced these firsthand to show you the ropes and teach you how to avoid and scale through the loopholes.

No doubt this article has shown you a lot as regards the establishment of a cooking gas business.  Be sure to apply all you’ve read for the success of your business.

 

TO GET THE COMPLETE LPG / COOKING GAS BUSINESS PLAN (INCLUDING THE FINANCIAL PROJECTIONS AND ALL). Pay N20,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

After payment text your name, your e-mail address and bank teller number to 08060565721 and you’ll receive your COOKING GAS / LPG FILLING STATION BUSINESS PLAN

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