Making Profitable Investment in LPG Gas Bottling, Articles _ THISDAY LIVE

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  • Saturday09May,2015Updated4:59

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    MakingProfitableInvestmentinLPGGasBottling

    25Jun2013

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  • Gascylinder

    GodwinUba

    Thepriceofkeroseneisrisingeveryday,totheextentthatithasgonebeyondthereachofpoorhomesinthecountry.Atthesametimethepriceofcookinggasisdecreasing.TheimplicationisthatmanyhomeshaveshiftedfromkerosenetoLPGcookinggas.Withthistrendthedemandhasincreasedtremendouslyandcallsformoreinvestmentinthisarea.ThisinvestmentprofileexaminesonhowtomakeaprofitableinvestmentintheLPGBottlingandMarketingbusiness.

    IntroductionNigeriahassomanyinvestmentopportunitiesinvarioussectors,gasandoilmanufacturing,financialestatesetc.Thegasandoilsectoraswellasothersectorsareexpandingandinvestmentopportunitiesopenupondailybasis.Foroureconomytogrownewproductiveindustriesmustbeestablished.Thiswillgenerateemploymentproviderawmaterialsforourindustriesgeneratephysicaldevelopmentandaboveallselfsufficiency.The Liquefied PetroleumGas (LPG) offers a tremendous investment opportunitywithin the petrochemical industry. The LPG is an industryspecifically developed to cater for the nations industrial and domestic gas requirements. LPG is needed in almost every aspect of economicactivity.Forinstance,itishighlydemandedbytheautomotiveindustry,manufacturingplantsandelectricitygenerationviathermalenergy.Atthedomesticlevel,mosthouseholds,particularlythemiddleandupperclassesofthesocietynowdependongasforcookingpurposes.Hotels,cateringoutfits, restaurants andbakers all demand theLPGas an alternative sourceof energy since the firewoodandkerosene stove are fastbecomingobsolete.Following theunprecedenteddemandforLPGinNigeriaandattendantscarcityof theproductwhichhas resulted insharpandarbitrarypriceincreases, 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.

    SourcesofRawMaterialsTherequiredrawmaterialforthisprojectwillbesourced100percentlocallyasabyproductofpetroleumrefiningactivities.Thus,ourrefineriesatWarri,PortHarcourtandKadunawillsupplytherawmaterial.Apartfromtherefineries,manyindependentmarketersimportbulkofLPGCookinggastoensureregularsupplytosmallandmediumscalegasbottlingandmarketingcompanies.Prospectiveinvestorscannowestablishsmallandmediumgasfilling(bottling)andmarketingbusinesses.

    ProjectLocationThe project should be located in any part of the country. The site should be accessible but isolated from residential buildings. Existinginfrastructuressuchasgoodroads,nearnesstothemarketandexperiencedmanpowershouldequallybeconsidered.

    EquipmentandMachineThe required facilities include storage tanks, filling shed, containers, cylinders, and pump/compressor. There should also be a workshop forservicingcylinders.Machineryandequipmentincludegasstoragetankscompletewithfittings,fillingheadsandscales,chainconveyor,pipingandvalvesaswellasfirefightingequipment.Detailswillbegiventoprospectiveinvestors.

    LabourRequirementLabourrequirementwillincludeaplantmanager,engineer,marketingmanager,accountant,supervisors,operators,driversandmessengersetc.allemployeesshouldbetrainedonfirepreventionandsafetymeasures.Boldwarningsagainsttheuseofnakedfireshouldbeerectedatstrategicplaces.Allthedetailsincludingsourceofmachineryandequipment,licensing procedure, plant layout, labour andmanagement, filling operations, safety bankable feasibility report for prospective promoters areavailableonrequestfromthewriter.

    CapacityofthePlantTheproposedplantwillhaveacapacityforfilling500cylindersof12.5kgeachday.Operatingat75percentcapacityfor280daysperannum,atotalof105,000cylinderswillbefilledandsoldataconservativemarketprevailing.Thecapacitycouldbedecreasedorincreaseddependingonthedesireofthepromoters.ProjectTakeoffCostFortheactualcostofestablishingtheproject,thereshouldbeacomprehensivefeasibilitystudies,puttingintoconsiderationtheproposedlocationoftheprojectbythepromoters.BasedonouranalysisthepromoterscangenerateaturnoverofoverN126millioninthefirstyear.Viability analysis of the project indicates that the initial capital outlay will be recoupedwithin the first year of business. The reason is notfarfetched.GasisnowconsumedinlargequantitiesbyNigerians,particularlythoseresidingintheurbanareasofthecountry.Apartfromtheshortpaybackperiod,theNPV,IRRandprofitabilityindexallpointtotheimmensefinancialbenefitswhichwillbederivedbyanyseriousinvestorwhotakesadvantageofthisinvestmentopportunityofferedbythegasindustry.

    ImplementationProcessTo go into this project, there is need to carry out a comprehensive feasibility studies and draws a very realistic business plan.After this the

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    financingarrangementwillbeconcluded.Thereareopportunitiesforonetoborrowfromsomespecifiedfinancialinstitutionsthatwillbegiventoprospectiveinvestorsonrequest.Thewriterwill assist in conducting a comprehensive andbankable feasibility studies reports procurement and installationof all the requiredmachines&equipment,testrunningandtrainingofthestaff.

    *UbawritesfromSurulere,Lagos

    Email:ubagodwin@yahoo.com

    Tags:Business,Nigeria,Featured,Investment

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    Tyrone 2yearsagoYes,onecanmakeaprofitablebusinessinlpgbottlingbutalwaysremembertohaveyourequipmentcheckedtoavertdisaster.www.kriergroup.co.za

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