Yes, today, I’m compelled again to write about an amazing business opportunity in Nigeria – LPG distribution otherwise called cooking gas distribution.
Our emphasis today is on LPG Distribution in Northeastern Nigeria. But you may ask, why Northeast Nigeria instead of the other regions.
Three reasons:
- Market
- Effect of climate change
- Employment opportunity to the locals
Market.
The market for LPG distribution in the Northeastern Nigeria is estimated to be over 100Billion Naira with highest percentage of the population using the traditional method of cooking of using firewood.
With estimated population of 29Million people, this part of the country has one of the best markets for the LPG distribution. The availability of skid in these locations is generally very limited. Some state having only about 8 10tons skid. This limited skid couple with unavailability of consistent supply lead to a large supply-demand gap that a new entrant into the market could fill.
Average price of LPG in the Northeastern Nigeria is between N1,050 to N1,200. Therefore, a supplier with consistent supply agreement with major LPG distribution could leverage on this new market that is yet to be exploited. Check on the depot price of LPG per kg across the major ports where most of the gas storage facilities are located in Nigeria indicated that the ex-depot price is between N750 to N800 and with a transportation cost ranging between N40 to N50, total direct cost could be either N790 or N840 which could translate to gross profit of between N260 to N360. In percentage terms, this is between 33% to 42% gross margin. In terms of profitability, this is the market that offers one of the best returns. This is therefore a good market to be exploited by a willing investor.
Effect of Climate Change.
Because the greatest percentage of the population in this region is depended on the use of firewood for cooking, this consequently has an effect on deforestation since most of the trees cut down for firewood are not replaced with new plantation. This in effect leads to recent emergence of Sahara Desert that is sweeping across the Northeast from Borno State to other Northeastern state of Yobe, Gombe and Adamawa state. Investment in LPG distribution in this region aside the financial benefit that would accrue to the investor also means reduction in deforestation which in turns means reduction in climate change.
Employment Opportunity for the Locals
With investment in LPG distribution comes with employment of labor who would man all the gas dispensing skids that would be spread across the region. Since the region is one of the most impoverished in the country, little employment opportunity could go a long way in ameliorating the situation on the locals. Imagine having 50nos. of 10tons skids employing at least 12staff per skid. That would translate to employment of over 600 direct staff to run the skid while at the same time making money.
With the above therefore, I seriously recommend that business leaders look into the opportunities they could tap into which greatly would help them create value not just to the shareholders alone in terms of return on investment but also to the planet and the people.
