How to Setup Petrol Filling Station in Nigeria, The Detail Requirements

Nigeria is one of the biggest oil producing nation in the world with a very huge crude oil deposits around the entire South South, South East, and South West region of the country, both tapped and untapped. Everything about oil is money, from exploration to exportation and marketing (crude or refined product), etc.

Further to being oil producing nation, Nigeria is also one of the biggest consumer of oil products in Africa with about 40 million litres said to be consumed everyday. Why not? All the millions of cars and trucks on the Nigerian roads run on PMS or AGO (petrol or diesel) everyday.

Almost every home in Nigeria have Generator that work sometimes all day to power our homes (I’m writing this article with my laptop powered by generator right now), and most of these millions of generators used in Nigeria run on petrol and diesel.

The Factories, Businesses, Schools, Hospitals, in fact everything in Nigeria depends of power generated privately from petroleum products consuming sets. And all these oil products are dispensed almost 100% through Petrol Filling Stations.Therefore, If you can lay your hands on petrol filling station of your own, to market all these products, you’re in for money. The demands for oil related products are very high, and suppliers seems to just can’t be enough. Even the major oil marketers like Mobile, Total, Oando, Texaco, and so on are always looking for individual (would be) marketers who have the needed finance and logistics that they can sponsor in this business.

The current commodity prices for these petroleum refined products are high, and that guarantees more profits for marketers – As at now (May, 2012) the prices of petroleum products are:

Petrol – N97.00 per litre
Diesel – N150.00 per litre
Kerosene – N130.00 per litre

These means that in Nigeria where 40million liters is said to be consumed daily on Petrol alone, a total of 97.00 x 40,000,000 =  N3,880,000,000 are spent on fuel daily by Nigerians!

Now let’s assume you buy a full tanker load of fuel with maximum load capacity of 30,000 litres. When the product is completely sold which usually takes less than six days to sell (depending on where your Petrol Filling Station is and the demand at that time), the cash returns expected from one tanker of each of the petrol product sells will be:

1 Tanker of Petrol = N2,910,000

1 Tanker of Diesel = N4,500,000

1 Tanker of Kerosene = N3,900,000

The Expected Profit Return from the sale of these products = N3,200,000. This means, in a week or so, if all the products are sold, you’ll be making profit of 3million Naira!

Don’t forget that the subsidy removal is not yet over, so the prices are bound to increase further high within the coming months. If there is any time you must invest in Petrol Marketing Business, it has to be now.

Your Petrol Station need not necessarily be in the city like Lagos, Abuja, Enugu, Port-Harcourt, etc. It can be located in the rural area as these areas are always neglected by the major marketers who prefer the urban areas. Having your Petrol Filling Station in the rural area is far less expensive to set up and to maintain and still guarantee sustainable profit.

In case you’re ready to hit the ground, here is a practical guide and requirements on how to go about setting up your Petroleum product marketing business either in rural or urban area. Enjoy it and drop me a feedback below in the comment box after reading!

Choose The Type of Marketer You Want to Be

There are two types of Petrol Marketers: Dependent Marketers and Independent Marketers. Each of them have both advantages and disadvantages. You’d need to understand these very clearly before choosing which one to go for. You can only be one at a time except you have enough investment capital to build more than one petrol station, use one for Franchise and the other for Independent Marketing.

Who is a Dependent Oil Marketer? -

You are an Dependent Marketer when you holds the Franchise of a Major oil Marketer to market under their name with your own facility fully branded by them. You’ll need to be clear on what the advantages are as that will help you make proper decisions. In my own opinion, it seems the advantages of being a Franchisee of a major marketer is more than the disadvantages

Advantages

1. You will build your business off the brand of The Major Marketer or what I called under the ‘umbrella’ of a Major Marketer.  The Major Marketers are the established brands like, TEXACO, Mobil, AP, Oando, Total, etc.

2. You will be riding on the back of your chosen Major Marketer and inherit their customer base within where your business is located, and as they keep marketing their brand, you keep making business off the popularity.

3. You wouldn’t need to assign Agent and representative to be at the depot on your company’s behalf, your Major Marketer already have that cover for you.

4. You wouldn’t have to pay for your petroleum products using bank draft, you pay directly into your Major Marketer’s account, taking away the hassles that come with it.

5. You will be having your products delivered directly to your filling station and on time by your chosen Major Marketer as they already have the logistics.

6. You will have no business with advertising, your Major Marketer overall brand advertising does that for you too. You just seat back while they do the marketing for you.

7. You will be enjoying some high level of logistic support from a well established brand and build your business off their credibility.

Disadvantages

1. You will miss out from the opportunity of building your own brand and pushing your name forward.

2. You will also miss out from gaining higher profit margin per litre of petroleum products you lift because the prices of products from The Major Marketers are higher. And the subsidy thing too will elude you.

3. Your operation will 100% dependent of your Major Marketer’s terms and conditions and policies. You will be regulated by them, including the prices, and the products you sell.

Who Is Independent Oil Marketer?

A Petrol Filling Station owner who run his business under his own name, buy products directly from NNPC and has a representative and assistant representative at the Petroleum Products Marketing Company (PPMC) depot by NNPC.

Advantages

1. You run your business under your own chosen name and build your own brand and marketing logistics.

2. You lift products directly from NNPC Depots at lower prices and earn certain amount per every litre of petrol products you lift, and you can source your product anywhere you like.

3. You are free of another company’s policies and standards, you deal directly with the authorities and agencies. You do your business under your own policy and terms.

Disadvantages

1. The minimum quantity of petrol product you can buy from NNPC Depot is one tanker of 30,000 litre that cost within 2million Naira. Therefore, you must find a way to afford it.

2. You must have your own tanker that will be transporting your products or you deal with haulage company which will cost money and delay sometimes in delivering the products.

3. You are in charge of marketing your brand, therefore you have to do some forms of advertising which cost money as well.

4. Payment for petrol products to NNPC requires bank draft issued in the name of NNPC and payable to The Central Bank of Nigeria in the state you intend to lift from. You must employ someone who will be doing that.

5. Each time you lift products, you pay the Independent Petroleum Marketers Association of Nigeria (IPMAN) N5,000 for insurance and Association fee.

6. Movement of petroleum products on your own from the depots to your filling stations involves many risks, accidents, fire, extortion, and cost. You’ll have to bear all that.

7. Many times. you may find it very very hard to get a supply form the NNPC, but if you’re a Major Marketer’s Franchisee, you will get supply as much as you want, at any time you want it directly from them.

With these, you can now be able to chose the type of marketer you want to be, and having decided on your choice of marketing status, the next thing is to acquire a property and build your Petrol Station.

Building Your Petrol Filling Station

 

Picture of Petrol Filling Station in Nigeria

 

1. Carryout research and feasibility study about the business structure and the location you intend to situate your business. This is very important as it will help your decision making and form part of your documentation.

Remember, you are making a huge investment, you need to carefully study your Intended Petrol Filling Station environment. After this, you proceed to get Approval to Construct.

2. Basically, your Petrol Filling Station has to be along the major road so that passing vehicles could easily have access to the facility.

3. Closeness to a busy area like motor park, round about, or market is a plus so that vehicles engaging in commercial activities in those area could easily branch and make use of your fuel station to have their tank refilled.

4. If your intended location is by the double lanes express-way, make sure the proposed land for your petrol station is close to a U-Turn or round about.

LAND –

Two plots measurement of land is the minimum property requirement to build your petrol filling station. This will be able to afford enough space for vehicles to queue and make exit turns.

Carefully negotiate price for good landed property, the prices varies from places to places and locations to locations, no specific price could be placed on that here. You will need to find that out using property Agents.

 STORAGE TANK –

After acquiring your property, do the documentation, carryout the proper land survey, and structural design. The next thing is to sink the Underground Storage Tank, these tanks varies in measurements: 30,000 litres, 35,000 litres, 40,000 litres, 45,000 litres, 60,000 litres, etc.

I recommend that you go for high volume tank, like the 45,000 and the 60,000 litres if you intend to be storing extra fuel. If you go for 30,000 litres underground tank and you intend to be lifting full tanker of 30,000 litres, then you will have to always wait until the last drop of fuel in that tank is sold before going for another turn.

CONSTRUCTION –

The petrol station construction engineer will be able to handle that effectively, I wouldn’t go on to tell you the the measurements, construction specifications, and all that (those ones are matter of choices). The Engineers should handle that, but you will need:

A Bungalow – How big or small is entirely your choice depending on the space available and what else you want to add. Do you want Restaurant, Supermarket, and Car Wash? Then, you need bigger bungalow.

Canopy over you Pumps – The shade constructed over petrol station pumps is called Canopy, it protects the pumps and the petrol attendants against the sun and the rain.

Perimeter fence – It’s regulatory requirements to fence the three sides of your petrol filling station, leaving only the entrance open for entry and exit. If you’re on a T-Junction, only two sides would be required to be fenced, the rest two would remain open for easy entry and exit from both joining roads.

Hardcore flooring – Vehicles of different sizes and capacity would be making entry into your petrol filling station when operational. Your floor must be hardcore concrete to resist the pressure from these vehicles.

Standby Generator (25kva to 35kva and above) – Do you need to be told that power supply isn’t stable in this part of the world? As far as petrol station is concerned, power supply is non stop throughout the the day, even when the business is closed for the day. Besides, standby generator is one of the requirement for approval.

3-6 Pumps (Electronic) – The pump that dispenses the fuel, you will need between 3 and 6 depending on your size and level of approval you get.

After all these have been done, next is to get your License and Approval, Click Here for the detailed procedures.

Staffing Your Petrol Filling Station

Security - This is in my number one in the list of staffs because of the high security risk in the business of having a petrol station due to the expected flow of cash. Security in this country as you and I know is a total mess. Until the cashless policy becomes fully operational and adopted by every individual, security will always be a top priority in this business.

Armed robbers prefer to attack late at night and during the weekends when they hope to meet plenty of cash. Prepare to battle them in all front, enlist the services of private security operatives and pay them well.

Make sure you wouldn’t be leaving plenty of cash within your petrol station at all times, security or no security.

Attendants – You will need 2 petrol attendants for each pump, they would be shifting between them, one person at a time. Multiple that by how many pumps you intends to have, that’s the number of attendants you need to employ.

Cashier – This person will be in charge of handling the cash and keeping records of the cash transactions. Employ an Account and use functional efficient software to keep accurate record of you cash movements.

Supervisor – His duty is to go about making sure everything is in order, both the facility and the staffs. He sees to it that everyone is up to his task and he/she reports back to the manager.

This person must be very reliable and proficient at what he does, must not be a compromising individual.

Manager – He is the superior in charge of the overall function of the petrol filling station and must be experienced with the running oil business. Every other staffs reports to him while he in turn is accountable to you. Carefully chose this person, your business can be make or marred by him. I’ve seen managers run businesses down.

With every thing stated above in place, you are 100% ready for real business and good to go! When the cash starts flowing, don’t forget me here.

Share on Google Plus Share on Linked in

Attend The EPIC BLOGGING Seminar (Jan 29th - 30th, 2016)

Do you want to learn how to blog professinally like me and earn real money, I mean millions of naira every month? Then start making arrangement to attend my 2days EPIC BLOGGING Seminar taking place in Lagos on January 29th and 30th 2016. You've never seen anything like this before and believe me, you'll miss the whole world if you miss it >>> CLICK HERE FOR DETAILS Follow @DarlintonOmeh