This is the complete guide to start diesel supply business in Nigeria and make big profit. Oil and gas business is one of the most lucrative businesses in Nigeria. People are making billions of naira annually and the demand keeps getting higher due to the epileptic power problem. Supply of Diesel also known as AGO (Automated Gas Oil) is one of the most profitable business in the Nigerian oil and gas industry.
I have had interest in this business over the years and that is why I decided to conduct detailed feasibility study and prepare a business plan for the business. Here are the findings so that you can also tap from the wealth in this sector.
Why is diesel supply a good business?
As stated earlier the power supply in the country is not good hence industries and banks use giant diesel engine electricity generating sets. All the giant diesel generators that power most of our industries run on diesel. MTN alone is said to have over 6,000 diesel generators that power all their base stations across the country and they about 24 hours daily.
Let’s assume that each of those generators consume 50 liters for 20 hours daily, that will be a total of 50 x 6000 = 300,000 Liters of diesel daily! In a month, MTN generators alone would have consumed 300,000 x 30 = 9,000,000 liters of diesel. That’s a huge demand.
Multiplying the above figure by all the four GSM Network operators in Nigeria,all the twenty something banks and their branches, all the factories, all the agencies and organization, all the media houses, and all the homes that runs almost 24 hours on generators. You will agree that billions of liters of diesel are consumed every day.
In business, the best product to deal on is the product that is in high demand.Therefore, diesel is one of the products of choice to sell when it comes to the Nigerian oil and gas supply business.
Another good thing about diesel supply business is that it is less complicated and less expensive compared to that of PMS (petrol). Diesel is easier to store and transport due the fact that it is less flammable, unlike PMS that could catch fire from a distance and requires more elaborate storage system that cost fortune.
One of the best parts of the business is that you basically do not need to store the product; all you need to do is to market your customers and supply on demand, cash your money and smile to the bank! You can even do the business on a small scare without keeping an office. However, to operate on the standard we are talking about, you must get an office. Diesel business is a serious business and requires careful planning.
Get it right and there are millions of naira waiting for you in this business –the issue of profit is like 120% guaranteed. Go ahead and invest provided you have the required capital.
Profit potential for Diesel Supply Business
Just like every good business, there is moneyto be made in Diesel supply and profit is always there. We are going to baseour calculation per litres per truck. You can get 33,000 litres of Diesel frommajor distributors and NNPC at N216 per litres (as at Nov 2018).
A truck of 33,000 liters of Diesel to retailers like Filling Stations suppliedat unit cost of N226 will give you a profit margin of N10. In that case, youwill be generating profit of 33,000 x N10 = N330, 000 from each supply. That isthe lowest profit you can make – profit for 33,000 litres are sometimes up to amillion naira.
When you multiply that to how many trucks you are able to supply in a month,you will find out you are in money. The secret to success in diesel supply businessis marketing. Expand your horizon, talk to as many companies and individuals asyou possibly can. The more you supply the more profit you make.
A medium scale Diesel supplier that puts everything properly in place makes 3to 5million naira monthly after expenses. Isn’t that great? 5million nairamonthly is a good business, so go ahead and start!
The figure above gives you an idea of what is obtainable! It is by no means thefinal figures, prices can change and some other factor may come into play.However, everything remains relatively within the estimated range.
If you have additional information you think will add more meaning to thisarticle, feel free to explain it in the comment section and lets expand the topic.We hope to make this article as comprehensive as possible to cover everynecessary details we need in starting Diesel supply business in Nigeria.
The Requirements for starting Diesel Supply Business
The requirements I’m talking about is the things you need to put in place to ensure a smooth starting of your business. They include;
1. Register your Business – You need to register your business either as a Business Name or Private Limited Company. Registration is very important in your business.
Some companies may not want to deal with non-traceable individuals. If you don’t have a registered company, you may lose out from their deals.
When your company is registered and with a permanent office, people feel more relaxed to do business with you because they know a place they can fall back to should they need to contact you physically at any time. That is very important in business.
Again, you have a place you refer people back to when negotiating a deal. Then people know you are serious in business. It cost about N10, 000 to register a business name and less than N50, 000 to register a Private Limited Liability Company with the Corporate Affairs Commission.
2. Build a Brand Name – Though this is not really compulsory for registration. Your name does not make much impression as your brand; it is the brand that people get attached to in any business. When you think of MTN, what immediately flashes into your mind is the yellow square logo – Isn’t it?
In this part of the world, people tend to look down on branding while some do it very poorly. Branding is even more important than the business itself; good branding will go a long way to lift your business.
Get professional Graphic artists and brand experts to work on your company’s brand. Let them design a professional logo for you and other things like your company letter head, business cards and stationary. Open a corporate account with your registered company’s name, etc. These are very important in any business too.
The importance of these in your Diesel supply business is that when you present business proposals to potential clients, everything will look professional and that helps to make a very good first impression which is vital for winning contracts.
3. Purchase or lease a Truck – You can always rent one from haulage companies. However, buying yours is more beneficial and cost effective at the long run. A good truck/ trailer head from Germany or anywhere from Europe cost about 20 million Naira. If you can’t get one, go for hire while you save money and buy later
Source for your Diesel Product
There are two major places to buy your product: From Major distributors like Mobil,
Texaco, Oando, Total, Conoil, etc. These are major
importers of the product and are always looking for distributors. In most
cases, they always have the products available though at higher prices.
The second one is NNPC. They offer the best prices but diesel is not always available. Approach these two major sources and negotiate your way.
The ultimate when it comes to Diesel importation in Nigeria happened to be Zenon Oil. You can buy your product from Zenon.
Latest Trend! The product is said to be very cheaper in Niger Republic. Some fuel importers import their diesel from the Soraz refinery in Niger at cheaper rate and sell to distributors within the North. If you have your own truck and logistics, you may give it a try, buying from them up North at cheaper rate especially if you are from the North. Else, you may just make go with the others (Zenon, NNPC and Major Distributors) for convenience and security.
Once you have the product aspect covered, your major assignment is marketing. Reach out for potential buyers. Make advert on the daily newspapers and online.
Now drop your questions and add what you know into the comment box and lets expand on this post. I wish you success in your journey to become a Supplier of Diesel oil product.