A Review of the Nigerian Energy Industry

Investing in petrol marketing business

Fuel station in Accra17 September 2013, Lagos – Study has revealed that investing in fuel retailing business is a money-spinner when proper and carefully setup and managed.

Looking at the increasing number of vehicles in the roads of major cities of Nigeria, one will tend to accept the above statement without any question.

Statistics has shown that the demand for fuel has been on an increase and will continue to increase. With the increasing number of domestic and industrial standby power generators in the country and the increasing number of motorcycles (okada) in our roads, the demand for petrol/fuel keep on increasing on daily basis.

It is therefore no doubt that no matter the level of economic down turn, this business is always a lucrative one.

This business is every forward minded business man. It is good for politicians, corporate managers and all classes of businessmen and women. Though the project may be capital intensive the turnover rate of return and payback period is very encouraging.

To invest in the downstream sector of the oil industry, the investor has two options; either to start with micro (small) filling station or mega filling station. Investing in any of the two is a function of available capital.

To handle the establishment of the project professionally, the first and foremost thing to do is to conduct a comprehensive and bankable feasibility studies on the project taking into consideration your preferred locations.
From our studies, location is very important in fuel retailing business because it is the major determinant of the turnover.

There are two major ways to go about the establishment of the fuel retailing station, either you acquire an existing station from a willing seller or you build one from the scratch. To acquire an existing station is good, but the level of traffic situation in the turnover is not a problem.

To start the construction from the scratch, the investor needs to first acquire a landed property at a location that will be very accessible.

Accessibility is one of the major factors to consider for business success.
After acquisition of land, there is need to go to the department of petroleum, resources to apply officially for approval to construct, giving details of the proposal and any information that may be relevant to the project.

You will be requested to submit an application form, three copies of a plan showing the building existing or proposed on the site and the relation of the site to the roadways and adjourning properties.

There is also need to get clarifications from the Federal and State Fire officer and the Area/Town planning Authority for the construction of a filling station on the proposed site. Furthermore the investors need clarifications from the Divisional Police Officer or Superior police officer in-charge of the police motor traffic.

An investor needs to show evidence to the DPR that the company is duly registered as a limited liability company by the appropriate Federal Ministry to deal in Petroleum products. The investor is required to show tax receipts and tax clearance certificates for the preceding years and Environmental Impact Assessment Report of the proposed filling station.

After meeting these requirements, on approval to construct will be granted by the DPR if the proposed site fulfils the conditions stipulated in the relevant sections of the petroleum regulations.

After the construction, an application for storage and sale licence must be made to the DPR, after the inspection had been carried out and satisfied as being satisfactory by officials of the DPR.
For a successful operation, the following facilities must be provided at the proposed petrol station; air compressor and air gauge, provision of water. toilet facilities, well stocked first aid box, refuge containers (waste baskets) and safety equipment facilities.

The applications for storage/sale licenses may be channeled through a sponsor company, with which the applicant proposed to supplier of the products, which must be a major oil marketing companies or independent oil marketing companies and pipelines and product marketing company.

Based on our financial analysis, the proposed project will take off with the sum of between N20million and N1 billion depending on whether it is micro or mega filling station.
The federal government just released through CBN over N500 billion for injection into small and medium scale industries development in Nigeria. Anybody with good business plan will benefit from the funds. There are also financial institutions and Special Project Funding Organisations that would be recommended to prospective investors.

The most important thing in setting up the project is good location. There is need to locate the project close to heavy traffic to greater turnover.
Detailed comprehensive and bankable feasibility studies on the proposed project and comprehensive implementation plan are available for interested investor.

– Gabriel Uba, This Day

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