Business & Investment

7 Steps to Start Kerosene Business in Nigeria

See the 7 Steps to Start Kerosene Business in Nigeria. here you will see everything you need right from finding business location to marketing your products.

See Also: 9 Ways To Join Oil and Gas Business in Nigeria with minimal capital

Kerosene also known as paraffin or lamp oil or coal oil according to Wikipedia is a combustible hydro carbon liquid which is derived from petroleum, widely used a s fuel in the industry as well as in households across the world .

Kerosene serves a lot of purposes in household even more than its common purpose of powering kerosene stoves for cooking and kerosene lanterns for lighting up the house during the dark.

Kerosene is so popular that it is found across the country in both urban and rural areas. If you have been wondering how to tap into the potential of sale of kerosene due to the high demand for it and its quick rate of turnover, this is the post for you.

7 Steps to Start Kerosene Business in Nigeria

BASIC REQUIREMENTS FOR START KEROSENE BUSINESS

1. LOCATION: First, before you venture into the sale of kerosene, you must have certain locations in mind for the business, do a quick feasibility study in order to determine the viability of the location you have chosen.

You must ensure that the location is primarily in a residential area with a lot of low income earners, as one of the main uses of kerosene is as a fuel for cooking. Your location could also be close to hospitals and schools.

You should also ensure that your location isn’t close to areas where there is smoking, open fires or incinerator spots as kerosene is easily inflammable and can cause explosions if exposed to direct heat.

You might also want to scan the areas to check if you have competitors. The presence of competitors should not scare you, rather it should propel you to develop strategies that would make you a quick favorite and grow your client base in no time at all despite being a newbie in the business.

2. A RELIABLE SUPPLIER: Kerosene in Nigeria is not sold at a fixed market rate. However petrol stations and depot suppliers sell it at a price that is generally regulated. So because there is no tight rein or regulation as to the retail price of kerosene, buying it from a good and reliable supplier which can either be a standard petrol station or a major depot, can be a way of guaranteeing even higher sales for you.

You can buy at a very cheap price and resell at your own location, using the laws of supply and demand to determine your own market price. If you intend to go into the business on a large scale, with a capacity of at least 1o,ooo liters you can source your kerosene from either NNPC terminals, PPMC terminals or from Independent marketers.

If your business is on a smaller scale, you can turn to NNPC Mega stations for a steady supply. You also want to have a reliable supply, so that they do not offer adulterated kerosene to you.

3. KEROSENE TANKER/STORAGE CONTAINERS: You can either buy the readymade tanker or get a welder to custom build one for you. It is preferable that you get a skilled welder to custom build one for you, so you can design it according to your specifications.

Get a tanker that has a minimum capacity of at least 10,000 liters so you can accommodate the demands of your clients. Having a tank with a large capacity will also allow you to operate as a middleman, selling kerosene in bulk quantities to small retailers in your location.

You can choose the option of having one big tank or a couple of smaller tanks to start with. However, having one big tank is more space efficient and makes expansion an easier activity.

But if you do not have a lot of startup capital, you can employ the use of metal drums which house about 200 liters or so of petrol, so if you are retailing only 1,000 liters for a start, with about 5 of these metal drums, you are good to go. They are not as capital intensive as metal tanks.

4. SALES ATTENDANT: seeing as your business is located in a primarily residential area and that people need to cook all through the day, you need to either be actively present all day at the location or employ a good sales attendants with basic book keeping knowledge to attend to your clients and monitor the sales activities daily. You also need your sale attendant to keep an inventory of your supplies.

5. A good knowledge of market strategies suited to the location of your business is also a must have. Some people recommend a form of mentorship or internship for a brief period before a newbie launches his business. So he can study the market survey and adequately develop ideas that will help to build his own business successfully.

6. LICENSING: if you are retailing below 10,000 liters of kerosene, the law exempts you from any form of licensing. However, when you are retailing above 10,000 liters, you are required to get some form of license as you business is no longer referred to as a small scale business.

7. MEASURING UNITS: you need a form of measuring unit in order to sell your product. Find the acceptable 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. In some locations, kerosene is sold 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 predicted that you can make an average of between N10 and N25 on each liter of Kerosene you sell and even more during periods of scarcity. In December 2016, there was scarcity of kerosene across the nation; it was so for as high as N250 per liter and retailers resold at about N300 per liter.

As with every other business, the sale of kerosene has its own risks and challenges, however, you are assured of a great investment if you put hardwork, devotion and dedication into your business, developing strategies that put you ahead of your competitors in the business.

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Abiola Ogunsola

Abiola is a content writer at InfoGuideNigeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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