In many third-world countries, kerosene (DPK or Dual Purpose Kerosene) is used extensively in both rural and urban areas for domestic purposes such as cooking, lighting kerosene-powered lanterns, and burning refuse. This explains why it fetches huge profits for oil and gas entrepreneurs in Nigeria and beyond.
Kerosene supply is a very lucrative business that can make you a millionaire within a couple of months; provided you run the business in Nigeria or in another country with similarly huge demand for the commodity. In fact, some entrepreneurs in these countries revealed that they realized all of their capital after the first 2 to 3 sales! Yes, the business is that lucrative.
If you have some cash lying fallow in your account and begging to be used for something worthwhile, why not multiply it exponentially by investing it in the kerosene supply business? Doing that would certainly be one of the business moves you will ever make. Now are you still wondering what makes the kerosene supply business very lucrative?
Well, as stated earlier, there is huge demand for the product in countries such as Nigeria, where over 10 million liters of kerosene is used up daily. But there are certain reasons for this huge demand:
3 Reasons why you should start a Kerosene retail business
Firstly, Nigeria (and other countries where kerosene is in huge demand) lacks stable electric power supply. And this explains why most people depend heavily on kerosene for cooking and other domestic purposes.
Secondly, Nigeria has a large population, comprising majorly of low income earners who buy kerosene because they simply cannot afford costlier energy sources. So, the market for kerosene in Nigeria (and many other countries in Africa) is very large.
Thirdly, the profit margin for kerosene is quite mouth-watering. You could buy the commodity at the rate of N50 ($0.3) per liter and sell at N100+ ($0.6) per liter. That’s 100% profit! Sometimes, you get more; sometimes, less.
Having discussed the profitability of the kerosene supply business, let me now explain how to start the business. If you are looking to start this business, take the following steps. Now there are two ways to go about this business:
You can get a haulage truck (tankers), buy kerosene from the depots and distribute to retailers.
You can also set up a mini depot and retail kerosene to end users.
Regardless of the one you choose, you will surely make money. However, this article will be strictly focused on the mini depot (kerosene retail) business.
How to Start a Kerosene Supply Business
P.S: If you are interested in starting a kerosene supply business, then you need a haulage truck of about 13,800 liter size minimum. If you want to become a large scale supplier, you can get a 30,000, 33,000 or 45,000 liter truck size (only Mobil and NNPC seem to have such trucks).
If you don’t have the required capital to purchase a truck or tanker outright, you can lease a truck. If you choose to go this route, I advice you get a lawyer to review the lease agreement properly. I also advice you partner with an oil and gas consultant or someone experienced in the business to help you crosscheck the truck details (picture, calibration meter, logo, transporter’s name, etc). This will be needed during the registration of the truck with DPR; so as to obtain the peddler’s license requirements.
It is also important that you register your driver with the PTD (Petroleum Tanker Drivers), which is a sub-branch of NUPENG (National Union of Petroleum and Gas Workers). To obtain the necessary licenses, you need a tax clearance, VAT certificate, a sponsor and your certificate of incorporation.
Once you have obtained the DPR Peddler’s permit, you can then proceed to register with the Kerosene Peddler’s Union. All these processes and licenses are important, so as to avoid your truck being impounded.
Once you are through with all the registrations, you can take your truck and money to any of the depots where they have products and start your business. You can choose to lift products from either the NNPC terminals, PPMC terminals or from independent marketers. In Lagos Nigeria, most of the independent marketers depot is located at Ibru Jetty Apapa, Tincan and Coconut.
When it comes to running a kerosene supply business, the profit is made based on volume; and this can be achieved via regularity of supplies. You should strive to lift at least three truckloads of kerosene per week or more. This is better than increasing your profit margin per liter.
In the next post we will be talking about how to start a kerosene retail business
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