How to Start a Kerosene Business in Nigeria: While the majority of Nigerians in the middle and higher classes prefer gas cooking, the necessity for kerosene has not been fully removed. This is because a large proportion of low-income earners in Nigeria outnumber the middle and upper classes, and cooking with kerosene is significantly more inexpensive for this group of individuals.
Have you considered opening a kerosene business in your neighborhood or supplying it to merchants and businesses? Kerosene is a vital petroleum product in Nigeria, where it is widely used in both rural and urban regions. Almost every household in Nigeria makes use of kerosene in some capacity. This is why anytime kerosene becomes scarce, people face suffering.
Kerosene is another petroleum product in Nigeria that generates significant revenue for oil and gas entrepreneurs. People are supposed to earn millions of naira daily in the industry, and based on my research, I can attest that it is a worthwhile investment. It’s so profitable that you can recoup your whole investment within the first month of sales!
Why Is The Kerosene Business So Profitable In Nigeria?
One of the primary reasons for Kerosene’s profitability is the product’s strong demand, which is a result of Nigeria’s extremely large population of low-income earners. Kerosene is believed to be consumed at a rate of 11,000,000 liters per day, and demand will only increase as the population grows.
Another reason is that Nigeria lacks an adequate supply of electricity. The majority of households rely significantly on Kerosene for cooking and other home energy-related reasons and simply cannot live without it.
Due to the tremendous demand for Kerosene, dealers make speedy transactions and then return for another round of supply. As a result, they earn an increasing profit as the round trips continue.
The differential in product pricing is very certainly the primary cause for the Kerosene business’s success. The majority of consumers are unaware of the true official price of DPK, but dealers are well aware of it and are profiting handsomely from their ignorance, even if it is unwarranted.
IMPORTANT REQUIREMENTS BEFORE STARTING A KEROSENE BUSINESS IN NIGERIA
Several items are required to start a kerosene business, including the following:
Without proper registration and license, you cannot begin a kerosene business. You must register your business with the Petroleum Products Marketing Company (PPMC) and the Department of Petroleum Resources (DPR) (PPMC).
Read also: How to Start a Gas Business in Nigeria
After registering, you will obtain a certificate allowing you to purchase kerosene in bulk directly from the NNPC. This enables you to obtain things at a discount. However, this process is time-consuming and, of course, costly.
However, if you choose an easier route, you can become an indirect marketer. You would obtain your products as an indirect marketer from registered marketers. Although you would pay a higher price than if you purchased directly from the depot.
You’ll need a prime location to market your wares. While some kerosene marketers own filling stations where they sell kerosene in addition to other petroleum products, if you cannot afford to build your own station, you can just establish a depot in a secure location.
I’ve even seen folks put up mini-depots for kerosene in front of their homes. However, if you choose this route, you must take safety extremely carefully.
3. DISTRIBUTION PUMP
To make selling your product easier, you should invest in an automatic dispensing pump. You may readily obtain them from dealers in major towns throughout Nigeria.
However, if you’re still unsure where to obtain one, you can inquire of those already in the industry; they will easily guide you in the right direction as to where they obtained theirs.
An automatic dispensing pump would simplify your job significantly by allowing you to accurately measure your products and charge your clients.
4. PETROLEUM TANKER
This is only necessary for individuals who intend to start a large-scale kerosene business.
If you have registered with the PPMC and DPR and wish to purchase your products straight from the depot or even begin supplying other kerosene sub-dealers, you will require a petroleum tanker to readily transport your products.
The capital required to establish a kerosene business varies according to the scale on which you desire to operate. With approximately N200,000, you can establish a small-scale kerosene business in your area or nearby. However, if you intend to execute this business on a huge scale, you should budget at least one million naira.
Benefits of starting a kerosene business in Nigeria
Kerosene has numerous benefits when it comes to starting it as a business here in Nigeria which includes the following:
1. It is an excellent combustible for cooking.
Several people rely on kerosene oil for cooking, particularly in rural areas and among low-income earners who cannot afford to purchase other more expensive cooking ingredients.
Aside from low-income earners, there are some high-income earners that prefer to cook with Kerosene rather than gas.
2. As a source of electrical energy
In nations such as Nigeria and other parts of Africa where there is a shortage of reliable electricity power supply, some people who cannot afford other more expensive sources of energy turn to kerosene as a source of energy for cooking and heating.
3. For profit and gain
Another aspect of the kerosene business that deserves mention is the profit and gain, which is substantial but varies depending on market conditions (demand and supply).
This is to state that the greater the demand, the greater the supply, and the greater the profit and profit margin available.
The difficulties associated with establishing a kerosene sales business in Nigeria
1. A substantial amount of capital is required to launch a kerosene distribution and retail business. If you want to make it big in the business world, you’ll need a lot of money. As a result, the business is an expensive enterprise to start out from scratch.
2. Obtaining your license and permit in a society such as Nigeria can be difficult at times, unless you know someone in the system who can assist you in navigating the system quickly and easily.
3. The product’s price does not remain constant over time. It changes on a regular basis. Consequently, you must be prepared to make adjustments, particularly when kerosene is in short supply or when clients become unreliable at the Kerosene terminal or depot.
However this article has been helpful in explaining how to start a kerosene business in Nigeria.