How to set up a Mini Kerosene Depot Business and earn good cash

This article will show you how to set up a mini kerosene depot business and start raking in big cash on a regular basis.

Dual purpose kerosene (DPK) probably has the highest market demand per liter profit of the three commonly used petroleum products; PMS, AGO and DPK. It is used in cooking and in other household domestic purposes.

Kerosene storage and sales business is one of the easiest and cheapest oil and gas business you can invest in. Kerosene business is a very lucrative business but it is as well volatile. You have to constantly watch the market. Profit can be from N30 to N40 per liter, sometimes you get it from the depot at N130, but on retail it would be about N150 to N250.In a normal situation where there is no scarcity, you can make between N10 to N35 per liter on kerosene. Kerosene business is therefore highly lucrative if done properly.

Starting a Mini-kerosene sales business

If you are starting with below 10, 000 liters of kerosene, the law excludes you from obligation to obtain a license to venture into the kerosene storage and sales business because it is regarded as a small scale business. Basically to start a kerosene business, some people decide to build storage tanks but it isnt necessary. Depending on the size of the tank, it could between N150, 000 to N200, 000 liters. But to reduce your capital, you could get drums of 200 liters. They cost about N3, 000 to N3, 500 depending on where you are buying them from. Starting with 1, 000 liters, you need just five drums. In this case you only need to get buckets and measuring cans.
Also, you need to know someone or a petrol station that has constant supply of kerosene. A trader in oil and gas that can supply you regularly and you are in business. You can store up to 10, 000 liters in your residential house.

Kerosene: N140 per liter x 1, 000 = N140, 000
Transportation: N5 per liter x 1, 000 liters = N5, 000
Drums: N3, 5000 x 5 = N17, 500
Funnels, Jerry-cans, hoses etc = N5, 000.
So, roughly with N200, 000, you can start kerosene business on a small scale.

Profitability

You would have observed that the selling price of kerosene varies from time to time and place to place. The forces of demand and supply determine the price of kerosene and the profit potential. The profit potential is usually estimated per liter. Today, kerosene profits range from N10 to N35 per liter or even more depending on availability. You can make between N10 to N35 per liter. If you get it at N140 per liter for example, you simply add an extra charge of N5 per litter to get it to your location. Let’s assume you bought 1, 000; N140 x 1, 000 liters = N140, 000 plus N5 per liter transport cost on 1, 000 liters which is N5, 000 making a total of N145, 000.You can add N20 on each liter, though depending on the area you are situated. In all, you would have made a profit of N20, 000. Depending on your location, you can sell 1, 000 liters in a day.

Location

Locate your business where you have high population density of people who constantly use kerosene. You will be guaranteed of quick sales and turnover. For example, you can’t compare your sales if you had an outlet in dolphin estate in ikoyi or Victoria garden city in Victoria island to an outlet in ajegunle or agege. You can also site outlets close to a university community with off-campus hostels or restaurants.

Accountability

After loading, transporting and discharging your product at your sales outlet, your most important job is to ensure that the quantity you demanded for is what is being delivered, because it is usual for drivers and other persons involved in the transportation of kerosene to tamper with it in transit.

Measurement

People will usually come to buy kerosene inside jerry cans, In order not to run at a loss, you need to first of all understand that the measurements of our jerry cans are incorrect, for example, the jerry can popularly regarded a s 20 liters is actually 25 liters when filled to the brim, 10 liters can actually be 12.5 liters. This will help you measure and price appropriately. Though what market women do in order not to incur loss is that they charge another small amount to cover for the mis-measurement and spillage on the floor when measuring. Some retailers engage in hoarding. They buy when the product is cheap and wait until the price increases before they sell. This is usually counterproductive. It is better to concentrate on selling more volume rather than on hiking prices to get more profit per liter. In essence, emphasis should be more on selling more quantities of kerosene in a month.

How to get your Kerosene products

Buying from an open source:

When buying from an open source, the minimum quantity you can buy is 4, 600 liters. You may buy a full tanker or just a single compartment of a tanker. If you are buying below 4, 600 liters, you need to rely on a marketer to supply you. If you are buying from the open source, then you have to go with your money to the refinery or depot and source for your product. You will meet with the representatives of the independent marketers who will have their agents on ground. After agreeing on terms, you are to make the payment to any of the banks that the agents use, and then go with the tellers to get your loading ticket and wait on queue till it gets to your turn. Meanwhile, you will arrange with a truck driver to transport the product to your sales outlet. Tankers are not hard to find as they usually operate from the depot. The driver then places his truck in the queue and it is loaded. You pay loading charges to the marketer, and then take the truck to your location where it is discharged and you pay for the transportation of the product at your sales outlet after considering other necessary sales and profit logistics.
Sometimes, people come together and buy one or two compartments. This way, you can share transport costs and the cost of loading and other worked out logistics in the proportionate ratio. Most people don’t lie buying from open source because they can easily get duped especially for someone new to the business.

Buying from Marketers:

Here you make arrangement with an independent marketer to come and supply you at your place of sales. The good thing about this is that the marketer doesn’t get paid until they supply you, some may dilute it and some may not even bring in the required quantity. The problem here for marketers is that when they deliver, people don’t usually pay complete cash. So all these hiccups make suppliers charge a bit extra. Marketers would usually request you pay into their bank account.

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