We all know that oil and gas business is one of the most lucrative business in Nigeria. People are making billions of naira annually and the money in the industry just seem endless! 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 been eying this business for quite sometimes now, that’s why I decided to dig deep around to find some facts that will enable me set up this business fast and easy anytime I’m ready. As usual, I am going to share the findings with you so that you too can tap from the wealth in this sector.
You know the quality of power supply we currently get in this country? It is nothing to write home about! 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 run on average of 20 hours daily.
If each of those generators consumed 50littres for the 20 hours daily, that will be a total of 50 x 6000 = 300,000 Litres of diesel daily! In a month, MTN generators alone would have consumed 300,000 x 30 = 9,000,000 Litres of Diesel. What a waste!
Now multiply 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! Needless to tell you that billions of litres of Diesel are avoidably burnt everyday in Nigeria.
In business and supply sense, the best product to deal on is the product that is in high demand. That makes diesel product one of the very product of choice when it comes to 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 besause – 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 part 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. Don’t get me wrong – Diesel business is a serious business and requires careful planning.
If you get it right believe me, there is 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.
Just like every good business, there is money to be made in Diesel supply and profit is always there. We are going to base our calculation per litres per truck. You can get 33,000 litres of Diesel from major distributors and NNPC at N2.5 at the unit cost of N78 per litres.
A truck of 33,000 liters of Diesel to retailers like Filling Stations supplied at unit cost of N88 will give you a profit margin of N10. In that case, you will be generating profit of 33,000 x N10 = N330,000 from each supply. That is the lowest profit you can make – profit for 33,000 litres are sometimes up to a million 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 business in marketing. Expand your horizon, talk to as many companies and individuals as you possibly can. The more you supply, the more profit you make.
In all, a medium scale Diesel supplier that puts everything properly in place makes between 3-5 million naira monthly after expenses. Isn’t that great? 5million naira monthly is a good business by all standard, so go ahead and give it a go!
The figure above gives you idea of what is obtainable! It is by no means the final 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 this article, 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 every necessary details we need in starting Diesel supply business in Nigeria.
The requirements I’m talking about is the things you need to put in place to ensure a smooth starting of your business. Let us take it one after the other and see how it goes.
Some companies may not want to deal with non traceable individual. If you don’t have a registered company, you may loose 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 anytime. That is very very important in business.
Again, you have a place you refer people back to when negotiating a deal, something like – My company is Dandy Oil and Gas Ltd. Our office is at No. 123 Ahmadu Bello Way. Then people know you are serious in business. It cost about N50,000 to register a Private Limited Liability Company with the Corporate Affairs Commission.
2. Invest in Brand Equity – This is really not official requirement but very necessary if you hope to Stay Ahead of Competition in your business. Your name do 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 flashed 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 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 very important in any business too.
The importance of these in your Diesel supply business is that when you present business proposal to your would be clients, every thing will look professional and that helps make very good first impression which is vital for winning contracts.
3. Purchase your 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 9Million Naira. If you can’t get one, go for hire while you save money and buy later
There are two major places to buy your product: From Major distributors like Mobil, Texaco, Oando, Total, Conoil, etc… They are major importers of the product and are always looking for distributors. In most cases, they always have the products available though at a higher prices.
The second one is NNPC. They are like the ultimate in terms of prices but not for availability anyway. 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 do 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 throw 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.