1. Find a good location
To succeed in the kerosene retail business, you need to be strategically located. A good place to site your mini kerosene depot is within residential areas with high population density. Of course, it will be preferable if majority of the residents are middle or low income earners as they are the ones that purchase kerosene more. Research shows that high income earners prefer cooking gas to kerosene.
Since you will be selling kerosene using a surface tank, you will need space large enough to accommodate one. If you have some space right in front of your home, then that would be just fine; since you won’t spend extra costs on rent. But if you don’t, you will have to pay rental fees either monthly or annually.
2. Register with the appropriate body or agency
Before you can start kerosene retail business, you will need to register with the specific regulatory body for kerosene sellers in your state or country. This body will then issue you a license and let you know the rules and regulations that bind selling kerosene.
Examples of such bodies are NUPENG (National Union of Petroleum and Gas Workers), DPR (Department of Petroleum Resources), and the Kerosene Retailers Association. To obtain the necessary licenses, you need a tax clearance, VAT certificate, a sponsor and your certificate of incorporation.
In Nigeria, the regulatory body for kerosene requires that your surface tank must be placed at no less than 200 meters from that of another kerosene dealer. This is to avoid stiff competition. Also, the body requires that surface tanks be painted blue and taped with white lines in the middle. This is to indicate that the tanks are used for storing kerosene and not another commodity.
3. Construct a surface tank
To get surface tank, you can approach a welder to help you construct a very good surface tank. You may also decide to buy an already built tank, this can be either new or fairly used. The cost of a surface tank depends on the capacity. You can decide to start with either a 5,000 or 10,000-capacity tank.
You must ensure that the tank is well painted on both the exterior and interior to avoid rusting. And make sure the welding is properly done to prevent leakage. It is also important that your tank quality meets the minimum specification, as petroleum taskforce officials regularly conduct inspections and checks.
4. Arrange with suppliers
While most of the kerosene sales in Nigeria are controlled by independent marketers of petroleum products, the Nigeria National Petroleum Corporation (NNPC) also controls up to 40% of kerosene sales in the country. This means that as a Nigerian marketer, supplier or retailer have two options to source your kerosene from.
You can either buy from the NNPC mega-stations sprinkled all over Nigeria or from any of the independent marketers. If you are not based in Nigeria, you may need to find out how kerosene is supplied in your country.
5. Launch your business
You can design a signboard or placard and position it near your tank. This will make people aware that you are selling kerosene. To attract customers, you may need to offer attractive discounts or bonuses at first. However, I want to point out that most kerosene retailers in Nigeria don’t advertise. Why? The reason is because there is always a steady supply of customers.
4 Challenges of starting a kerosene retail business
Both kerosene supply and retailing business are capital and management intensive.
Another challenge you will face is the bureaucratic process and hurdles you will pass through, just to obtain operation permit especially in a country like Nigeria. Believe me, it is quite cumbersome and stressful that you might even lose the zeal to go ahead with the business.
The third challenge you will face is getting regular supply. Due to the demand, you may be finding it difficult as a retailer to get a steady supply of kerosene from your supplier. Even suppliers also face challenges when loading at the various terminals or depots.
You should also be prepared to deal with the issue of theft because in this business, everyone is seeking an opportunity to rip you off. That is why you must learn the rudiments of the business thoroughly to avoid being shortchanged by your suppliers and employees.
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