CHALLENGES AND OPPORTUNITIES IN LPG DISTRIBUTION

Consuming liquefied petroleum gas (LPG) is becoming increasingly essential in Nigeria, particularly now that the government is advocating for the use of Autogas. Previously, LPG was only used in the kitchen and for other large-scale industrial applications. There is a desperate demand for it right now. There is a money-making potential in this entire situation, and you cannot afford to pass it up. If you've ever considered establishing a LPG business, you should give gas distribution business a go today, at least on a modest scale. This is due not just to the fact that everyone cooks, but also to the fact that next-generation automobiles are built to use it. Kiakiagas is a company that has vast experience in the building of gas projects in quick time. Our platform provides data to support infrastructural development in the gas value chain. Our management platform allows you to monitor the progress of your project in real time with our real time project monitoring. We offer a variety of services that cater for every stage of your project development.

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CHALLENGES AND OPPORTUNITIES IN LPG DISTRIBUTION


Consuming liquefied petroleum gas (LPG) is becoming increasingly essential in Nigeria, particularly now that the government is advocating for the use of Autogas. Previously, LPG was only used in the kitchen and for other large-scale industrial applications. There is a desperate demand for it right now. There is a money-making potential in this entire situation, and you cannot afford to pass it up. If you've ever considered establishing a LPG business, you should give gas distribution business a go today, at least on a modest scale. This is due not just to the fact that everyone cooks, but also to the fact that next-generation automobiles are built to use it. Kiakiagas is a company that has vast experience in the building of gas projects in quick time. Our platform provides data to support infrastructural development in the gas value chain. Our management platform allows you to monitor the progress of your project in real time with our real time project monitoring. We offer a variety of services that cater for every stage of your project development.
 

You can apply to become a super distributor for LPG or a minor LPG distribution business which will include sales of LPG cookers, fittings, and site installation in a specific location. LPG is supplied from the depot with full LPG tank in bulk at a reasonable wholesale price. This will then be redistributed and sold at a reasonable profit margin to the consumers. Challenges in LPG distribution have prompted the existing distributors out of the market while the prospective distributors are prevented having acquired wrong information from wrong source about the LPG business. Kiakiagas are well informed about the LPG business through the stages of chain of distribution. With our team of business and data analysts, we calculate your prospective strength, weaknesses, opportunities and threats in the business based on our existing data before you venture into the business. In other words, we conduct a feasibility study which represents a snapshot information to guide you through the business so as to maximize the profit in the located area. Below are the challenges that you are likely to face as a prospective distributor of LPG:
 
CHALLENGES
 
LPG Tank/Cylinder Management Issues: As a super dealer, you must ensure that you have enough complete gas cylinder stock at all times to meet client orders immediately. To ensure effective supply, at least one supply truck should be present. The basic truth is that the initial money required to establish an LPG wholesale distribution firm is substantial. However, with an excellent business plan and feasibility study, it is much easier to secure the assistance of both investors and financial institutions. The chances of becoming a successful LPG distributor are increased if the feasibility assessment of the location is carried out by a team of our experts in the LPG rather than doing it alone or inviting a non-competent instructor If you're thinking about beginning a liquefied petroleum gas distribution business, it's a good idea to see if there are any suitable franchise possibilities available that could help you get started faster. Kiakiagas will get you cleared from the relevant authorities that regulates the LPG activities in the oil and gas sector. This is a cogent reason why you should book a session with us through our website to have discussion on how you can set up LPG distribution businesses.
 
Government Regulation: Another risk in the business is government regulation. Should government decide to increase the price of LPG today, some consumers may find it difficult to take and have to go back to using kerosene or firewood. If that happens, you lose some customers and your sales will drop. However, government is always trying to reduce the price of cooking gas to encourage its usage and discourage deforestation.
 
Competition: The company is at a competitive disadvantage as an emerging liquefied petroleum gas wholesale business startup since the company brand is just beginning to create an identity in the marketplace. Unless you are really committed to the idea of a startup, you can avoid the time required to build a brand identification by purchasing a business with an established name. As a startup, your best bet is to gradually build brand awareness over months and years. A LPG wholesale business acquisition, on the other hand, can place one at the helm of a brand that is already well-known in the target market.
 
Choice of Location: As a retailer dealing in the distribution of LPG in a certain location, you have a better chance of reaching more customers because services are closer to end consumers. Kiakiagas will equip you with proper strategies to make you the best alternative for them when it comes to proximity to the Gas market. In essence, the retailer serves as a profitable link between a huge gas plant and its buyers. Before starting the LPG distribution business, it is necessary to go through training to at least obtain the fundamental safety precautions. Some of the topics covered include, but are not limited to, how to detect and repair leaks in gas cylinders, how to weigh cylinders of various sizes using a scale, how to properly refill gas cylinders such as 3kg, 5kg, 6kg, 12.5kg, 13kg, , 25kg and 50kg and how to charge for prices of any custom quantity that customers may request. The Retail sub-division is rapidly extending its reach and client base across the country, with the objective of being the preferred market leader in delivering refined petroleum products to consumers across the country.
 

 
Safety: Risks in LPG business According to Darlinton Omeh, an investment analyst, every business has its peculiar setback and the biggest risk in cooking gas business is fire explosion, which is very common due to the high inflammable nature of liquefied natural gas. That isn’t much problem though since it can easily be mitigated or even avoided. ‘‘To be able to curtail this, you need to be alert at all times to detect when there is leakage in those cylinders as leakage is one of the major causes of fire and explosion. You also need to buy good fire extinguisher that can be very handy in time of minor fire outbreak,’’ he said. Kiakiagas will engage you with safety training which will aid in the selection of a safe location for the LPG distribution business. Because gas can cause environmental risks, launching in a cool, dry location with strong demand is critical. Training with Kiakiagas will help you to acquire accurate measurement of gases in tons, kilos, or litres. LPG purchased for resale is stored in tanks or 50kg cylinders before being sold in smaller quantities to customers who keep it in 12.5kg, 6kg, or 3kg cylinders.
 
Funding: A typical LPG distribution business may incur expenses such as funding to establish a new business, renting a shop, and purchasing operational materials such as tanks, cylinders, scales, transfer hoses, and other tools. A significant sum of money will be required to purchase the product (gas) and transfer it directly to the retail business. In any case, the typical cost of beginning a retail LPG distribution business is between 290,000 and 390,000 NGN. Some people may be put off by the prospect of starting a gas refilling business because someone they know has failed miserably. People are smiling to the bank functioning as LPG Suppliers, despite the fact that it may be depressing.
 
OPPORTUNITIES
 
Gas companies, both the suppliers and retailers are making good money in the business. It is good news that more Nigerians are beginning to use cooking gas for various domestic cooking purposes. That will help decrease the problems of deforestation and help conserve the nation’s natural forests and prevent potential disasters inherent in desert encroachment such as erosion. Apart from the environmental benefits, the increased number of people, especially in urban areas, who are using cooking gas has created good business opportunity for smart entrepreneurs who can now trade on cooking gas and cooking gas equipment to make good profits.
 
Push by the federal government: Cooking gas business is very profitable and you don’t have to break the bank before you can start. This is a big business that anyone who is into it can be proud of. Gas cylinders How exactly can one start cooking gas business in Nigeria? Before we go into the details, let us first take a look into the profit potential in this business as well as the risks involved. If you have been observing the news lately, there is a push by the federal government of Nigeria to deepen the usage of LPG in the country.  And this push will start yielding results soon. If you have been procrastinating about starting your own LPG distribution business, this maybe the reason to revisit that plan and put it back to work. 
 
Cooking gas value chain: Opportunity inherent in the cooking gas value chain is the sale of cylinders and accessories, which can be managed alongside the gas plant, offering a one-stop service for customers. “This is relatively the lowest profit you can make in cooking gas business if you are in respectable position where you get good patronage. Most people make much more than what I calculated here. So, it’s not in any way by exaggeration. “For a business you started with N300,000, N150,000 profit is a super profit by all standards. Imagine if you invest more resources and take it higher, your profit will be much more mouthwatering.

 
 
 
 
 
 
 
Understanding LPG Demand Curve: Now imagine if we can switch another 25% of our population from House Hold Kerosene to cooking gas in the next 36 months 50% of annual consumption= 600million kg (1.54billion Litres).  Cooking gas business is a very profitable business, but just like every other en-devour of life, it comes with its own challenges. Most of the energy used for domestic cooking in Nigerian homes comes from traditional forms of energy like HHK (kerosene) which accounts for 65-70% of the energy consumption in Nigeria, LPG stands at 25%, while other fossil fuels like firewood and coals accounts for the remaining 5%.
 
Nigeria's average household size: Another opportunity is that Nigeria's average household size is six people, according our existing data. When you split 200 million by six people per family, you get 33 million people who buy cooking gas on a monthly basis. Because the demand curve is still expanding, many people are unaware of it. Positioning oneself in the market now is equivalent to purchasing Bitcoin at a price of 0.0003 dollars. Remember that this is a moving market. Exponential growth is possible. Though demand does not change on a daily basis like fuel usage, consider the demand curve if every household in the country utilizes cooking gas.
 
Way Forward
Locating business closer to customers and then increasing advertising budget will help solve the issue. Whether they realize it or not, the majority of Nigerians in metropolitan areas (if not all) use LPG to cook. That number is steadily increasing, and now is your time to profit. All you have to do is do a market study (research) to find out when LPG is in great demand, who or what class of individuals requests it, and where they are concentrated. The information you've gathered thus far will help you choose a profitable site, one that will provide you with a constant market for gas and its accessories. In reality, it is preferable to locate in a virgin place with a good level of daily demand and then utilize advertising to fill in any gaps. Advertising is never-ending and never-ending. Some clients have yet to form a strong bond with any LPG provider. It is your responsibility to approach them with enticing offers such as first-time purchase discounts or an offer to pick up their cylinders, refill them, and return them to them. The working class would fall for it, and you'd be laughing all the way to the bank.
Conclusion
There is money to be made in the gas distribution business in Nigeria right now, this advantage can be taking with a little hard work. It all entails learning the ropes of the business, get the help of specialists, conduct research and analysis, secure funding, and conduct feasibility study. Most aspiring gaspreneur are intimidated by the prospect of obtaining a LPG feasibility study. A solid LPG feasibility study acts as a reality check, comparing your business instincts to those of your competitors. The backend of business planning requirements is a feasibility analysis of the LPG company strategy.
In most cases, tracking tools are incorporated into the company's launch plan in order to run a successful LPG business. It is a wise decision to learn as much as possible from a respected company that has created a landmark in the industry as part of due diligence on launching a LPG depot, wholesale, and retail business. You're being overconfident if you believe your local competitors will provide you technical advice. Why would they want to educate a competitor in the future? As long as they do not perceive a competitive danger, an owner of an LPG business in another town, city, state, or country may be more than pleased to provide thorough advice.
KiakiaGas Limited is a leading Gas business in Lagos, Nigeria with expertise in LPG retailing, New Gas Market development, Building of Gas Plants and Gas strategy advisory. Supply by KiakiaGas provides LPG products and equipment for corporate and institutional clients for the project and operational needs. If you need a partner with hands-on local expertise in the Nigerian and African Gas space or any of our bespoke solutions/services, kindly visit www.kiakiagas.com to learn more.

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