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MakingProfitableInvestmentinLPGGasBottling
25Jun2013
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Gascylinder
GodwinUba
Thepriceofkeroseneisrisingeveryday,totheextentthatithasgonebeyondthereachofpoorhomesinthecountry.Atthesametimetheprice
ofcookinggasisdecreasing.TheimplicationisthatmanyhomeshaveshiftedfromkerosenetoLPGcookinggas.
Withthistrendthedemandhasincreasedtremendouslyandcallsformoreinvestmentinthisarea.Thisinvestmentprofileexaminesonhowto
makeaprofitableinvestmentintheLPGBottlingandMarketingbusiness.
Introduction
Nigeriahassomanyinvestmentopportunitiesinvarioussectors,gasandoilmanufacturing,financialestatesetc.Thegasandoilsectoraswellas
othersectorsareexpandingandinvestmentopportunitiesopenupondailybasis.
Foroureconomytogrownewproductiveindustriesmustbeestablished.Thiswillgenerateemploymentproviderawmaterialsforourindustries
generatephysicaldevelopmentandaboveallselfsufficiency.
The Liquefied Petroleum Gas (LPG) offers a tremendous investment opportunity within the petrochemical industry. The LPG is an industry
specifically developed to cater for the nations industrial and domestic gas requirements. LPG is needed in almost every aspect of economic
activity.Forinstance,itishighlydemandedbytheautomotiveindustry,manufacturingplantsandelectricitygenerationviathermalenergy.
Atthedomesticlevel,mosthouseholds,particularlythemiddleandupperclassesofthesocietynowdependongasforcookingpurposes.Hotels,
catering outfits, restaurants and bakers all demand the LPG as an alternative source of energy since the firewood and kerosene stove are fast
becomingobsolete.
Following the unprecedented demand for LPG in Nigeria and attendant scarcity of the product which has resulted in sharp and arbitrary price
increases, the distribution of gas products has been deregulated. Consequently, private individuals and firms can now set up LPG plants.
Governmenthasmadethisproductavailable.
Beforenow,a12.5kgcylindernowsoldforN3,000andN4,000andthisrangeisconsideredhighandunaffordableformanyNigerians.Today

thepricehascomedowntobetweenN2,000andN2,500whichisconsideredmoderateandaffordable.
SourcesofRawMaterials
Therequiredrawmaterialforthisprojectwillbesourced100percentlocallyasabyproductofpetroleumrefiningactivities.Thus,ourrefineries
atWarri,PortHarcourtandKadunawillsupplytherawmaterial.
Apartfromtherefineries,manyindependentmarketersimportbulkofLPGCookinggastoensureregularsupplytosmallandmediumscalegas
bottlingandmarketingcompanies.Prospectiveinvestorscannowestablishsmallandmediumgasfilling(bottling)andmarketingbusinesses.
ProjectLocation
The project should be located in any part of the country. The site should be accessible but isolated from residential buildings. Existing
infrastructuressuchasgoodroads,nearnesstothemarketandexperiencedmanpowershouldequallybeconsidered.
EquipmentandMachine
The required facilities include storage tanks, filling shed, containers, cylinders, and pump/compressor. There should also be a workshop for
servicingcylinders.Machineryandequipmentincludegasstoragetankscompletewithfittings,fillingheadsandscales,chainconveyor,piping
andvalvesaswellasfirefightingequipment.Detailswillbegiventoprospectiveinvestors.
LabourRequirement
Labourrequirementwillincludeaplantmanager,engineer,marketingmanager,accountant,supervisors,operators,driversandmessengersetc.all
employeesshouldbetrainedonfirepreventionandsafetymeasures.
Boldwarningsagainsttheuseofnakedfireshouldbeerectedatstrategicplaces.Allthedetailsincludingsourceofmachineryandequipment,
licensing procedure, plant layout, labour and management, filling operations, safety bankable feasibility report for prospective promoters are
availableonrequestfromthewriter.
CapacityofthePlant
Theproposedplantwillhaveacapacityforfilling500cylindersof12.5kgeachday.Operatingat75percentcapacityfor280daysperannum,a
totalof105,000cylinderswillbefilledandsoldataconservativemarketprevailing.Thecapacitycouldbedecreasedorincreaseddependingon
thedesireofthepromoters.
ProjectTakeoffCost
Fortheactualcostofestablishingtheproject,thereshouldbeacomprehensivefeasibilitystudies,puttingintoconsiderationtheproposedlocation
oftheprojectbythepromoters.
BasedonouranalysisthepromoterscangenerateaturnoverofoverN126millioninthefirstyear.
Viability analysis of the project indicates that the initial capital outlay will be recouped within the first year of business. The reason is not
farfetched.GasisnowconsumedinlargequantitiesbyNigerians,particularlythoseresidingintheurbanareasofthecountry.
Apartfromtheshortpaybackperiod,theNPV,IRRandprofitabilityindexallpointtotheimmensefinancialbenefitswhichwillbederivedby
anyseriousinvestorwhotakesadvantageofthisinvestmentopportunityofferedbythegasindustry.
ImplementationProcess
To go into this project, there is need to carry out a comprehensive feasibility studies and draws a very realistic business plan. After this the

financingarrangementwillbeconcluded.Thereareopportunitiesforonetoborrowfromsomespecifiedfinancialinstitutionsthatwillbegivento
prospectiveinvestorsonrequest.
The writer will assist in conducting a comprehensive and bankable feasibility studies reports procurement and installation of all the required
machines&equipment,testrunningandtrainingofthestaff.
*UbawritesfromSurulere,Lagos
Email:ubagodwin@yahoo.com
Tags:Business,Nigeria,Featured,Investment
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Jointhediscussion
Tyrone 2yearsago

Yes,onecanmakeaprofitablebusinessinlpgbottlingbutalwaysremembertohaveyourequipmentcheckedtoavertdisaster.
www.kriergroup.co.za

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