Diesel Supply Business Plan in Nigeria
One of the most celebrated business sectors in the world is the oil and gas sector, it has been known to make several individuals billionaires overnight. As a matter of fact, in Nigeria, if you have an oil block or an oil well, even if its resources are untapped, you naturally become the envy of the whole community. For several decades now, the oil and gas sector has been the mainstay of the Nigerian economy, it has become the most important export commodity of the nation. The industry makes billions of dollars on a yearly basis for the country and the individuals involved are known to constantly smile to the bank.
Also Read: Petrol Filling Station Business Plan in Nigeria
Diesel is one of the different products gotten from the fractional distillation of crude oil. Another name for diesel is Automated Gas Oil (AGO) and it is one of the most economically important crude oil products. For example, it is no news that the country is frequently suffering power outages which is known to cause businesses to lose a lot of cash, most businesses have resorted to using generators and most of these generators run on diesel. This is just one of the sectors that relies on diesel, there are several others, which shows that the diesel supply business is definitely profitable, depending on how you approach it or how you manage the business.
Since the industry is largely recognized as the most profitable in the country and indeed has been for more than three decades now, it is obvious that several sectors under it are almost completely saturated as several people are taking advantage of the fascinating offers available. The different sectors churn out naira in different amounts from hundreds of thousands to millions and billions of naira yearly. A major plus for this business is that you do not have to be overly rich to partake in the venture, you can be involved in the diesel supply business in different capacities, it all depends on how much capital you have to begin.
Get your Diesel Supply Business Plan in Nigeria today.To order the business plan in Nigeria, pay N20, 000 to:
BANK NAME: FIRST BANK PLC
ACCOUNT NAME: CHIBUZOR TOCHI ONYEMENAM
ACCOUNT NUMBER: 3066880122
After payment, text your full name, email address and title (Diesel Supply Business Plan in Nigeria pdf) to 07033378184. Your business plan will be sent to your email within 15 minutes.
What does the diesel supply business entail?
The business is based on the needs of other for diesel, it is simply the distribution of Automated Gas Oil, which you know as diesel to people that need it or organizations that require daily supply. There are several organizations who are constantly in need for diesel as they have serious power needs which cannot be met by the regular power supply from the PHCN. Some of these organizations include manufacturing companies, agricultural firms, printing presses, hospitals, hotels, government parastatals, etc. When you look at this list, it is evident that the business is very profitable and lucrative and can be a major money spinner for the entrepreneur.
How the diesel supply business works in Nigeria
In Nigeria presently there are two ways of carrying out the diesel supply business, they will be briefly explained below:
- Supplying diesel to tank farms. Tank farm are known to be in constant need of diesel supply, also known as Automated Gas Oil (AGO), among other fractions of crude oil. They are most likely going to be in need of PMS and DPK, though this is majorly dependent on the commodities which they are engineered to store.
Supplying the diesel to a tank farm is carried out using a vessel. Several individuals import huge quantities of diesel into Nigeria on a regular basis and in seeking places to dispose of their imports they hire services of several sales personnel. Some of these personnel include procurement officers, brokers and seller mandates who work on their behalf to fish out tank farms who will be needing their products. Once a tank farm is identified, they work on signing a deal to supply certain quantities of diesel for a specific period of time, mostly a year. This way they get to handle all the diesel supply needs of that particular tank farm for that period and if need be, the agreement can be extended, usually if both parties are satisfied with the terms and conditions underlying the agreement. Generally the diesel suppliers who deal directly with tank farms make between 5 and 10 naira per liter, the tanks farms are also known to make profit of about the same range. Looking at the amount per liter it might seem quite small, but looking at the amount on the long run, since the tank farms usually require millions of liters of diesel at a time, the profit haul is huge. For example if a tank site is requiring 10 million liters of diesel at a time and the supplier is making a base profit of 5 naira per liter, the total profit will amount to 50 million naira at a go.
- Supplying of diesel to organizations. As stated earlier, several organizations, both private and government owned alike require diesel supply for their daily activities to run unhampered. Some of these organizations include hospitals, hotels, manufacturing companies, press houses, printing outfits, etc. Something you should consider however is that most of these bodies do not pay immediately on receipt of the diesel, they usually wait till the end of the month or an agreed period. Regardless of this, the supplier gets to make higher profit than expected as they could sell the product close to 25% higher than the regular market price. What keeps the supplier afloat for most of the time is having a wide range of customers that they supply to, this way they are in constant business, as while they are waiting for one client to pay, they would have received payment from another. It runs more like a cycle.
Starting the diesel supply business in Nigeria without capital
I am sure that from the above several young graduates will be scared and somewhat discouraged of going into the business because of the seemingly higher capital requirement. There is good news, you can actually be involved with the diesel supply business even if you do not have startup capital. The most advisable way to enter into the business is by becoming a broker, I am sure you must be wondering what that means and how it works, well you can go through the next few paragraphs to enlightened in this regard.
Diesel broker
In simple and plain language, a diesel broker is an individual who seeks out firms or organizations who are in need of diesel supplies, makes a connection with the diesel suppliers for the sale to happen at a reasonable price and gets paid for the connection. Mostly what they do is get a quotation from the supplying company, mark up the stated price, probably with about 2 to 3 naira and then present it to the organization making the purchase. So for example if they gain a contract to supply 100,000 liters of diesel and they put on an addition of 3 naira, they will be making 300,000 naira on the supply. That is a very good deal, especially for someone who did not put in any capital into the business. A major advantage of being a diesel broker is that the broker does not need to own an office, just build a trustworthy portfolio and grow your client catalogue and you could become a multimillionaire in less than no time. A major skill the broker needs is marketing and interpersonal skills, with these you can grow your client base very quickly.
Finding organizations in need of diesel suppliers in Nigeria
I know that gaining an understanding of what a diesel broker is will put in you some form of curiosity as to how to find organizations who need diesel supplies. It is not very difficult to do that, you will just need to move around a lot more, pay prospective customers a visit and ask questions. Each of these organizations is likely to have a procurement officer, going through the procurement officer makes your work a lot easier. You will need to prepare a company profile which you will submit alongside your proposal to supply diesel to the said company.
A procurement officer is an individual who helps an organization to get suppliers for their specific needs, in this case diesel. Meeting and proposing your deal to many procurement officers puts you at a better chance of getting a supply contract as all they will have to do when their organization is in need of diesel is give you a call and state the details of their need, then you can carry on from there.
Asides the procurement officers, you can use social media to track most of your prospective clients, most of them are likely to place an advert of their need for a supplier online, mostly on LinkedIn. You just have to ensure as a broker that you are constantly abreast of such information.
Requirements in starting a diesel supply business
Below are the necessities you need to have in place before you can set out as a diesel supplier in Nigeria:
- Business registration. This is one of the most important steps that you need to take, get registered with the Corporate Affairs Commission as a Private Limited Company or a Business Enterprise. Nobody will want to deal with an untraceable individual, especially when we are talking of large sums of money, such as is being transacted in the diesel business. People are more at peace with an individual who is registered and has a physical office address. This also helps for referral purposes as well as opening bank accounts for the business.
- Invest in growing your brand. In this part of the world quite a number of businesses take branding for granted. You should know that what you push out as your brand is what grows your popularity, let us consider Globacom for instance. Anywhere you see the logo you automatically know it is Globacom, when you see the green color in a circle, you most certainly will guess that it is Globacom. That is what branding does for you. It gives your prospective clients a notion that you are serious with your business and you are an excellent personality to deal with.
- Get a distribution truck. For starters you might want to rent one from a haulage company, if you do not have the capacity to buy one yet. On the long run it is cheaper to have your own truck so it will be a wise decision to invest in a truck for your diesel supply company.
Sources of diesel for suppliers
With you acquiring the knowledge on what you need to start up the business, it is imperative to seek out knowledge on where to get the product, after all without this there is no way to become a supplier.
There are two major ways of getting diesel for supply in Nigeria. The first is from major distributors, some which include Oando, Mobil, Total, Texaco, Conoil, etc. These are recognized as major distributors of the commodity and are known to always have stock even though it may be at higher prices. The second source of diesel for suppliers in Nigeria is the Nigerian National Petroleum Corporation (NNPC), howbeit the can be very unreliable. They are however recognized for their cheap prices, but you might not always get supply from this quarters. Presently in Nigeria, the most recommended source of diesel for suppliers is Zenon, they are known to always have the stock and sell at reasonable prices.
Following all that has been stated above and getting your commodity, it is safe to say that you are on your way to making some good cash from the business. However one major issue to consider is that you must be able to market your product as widely as possible and you must be very efficient in managing the business. Having all the information without efficient management will still amount to failure on the long run. I believe this article has been helpful in your quest for knowledge with respect to this topic, thanks for reading.
Get your Diesel Supply Business Plan in Nigeria today.To order the business plan in Nigeria, pay N20, 000 to:
BANK NAME: GUARANTY TRUST BANK (GTB)
ACCOUNT NAME: CHIBUZOR TOCHI ONYEMENAM
ACCOUNT NUMBER: 0044056891
OR
BANK NAME: FIRST BANK PLC
ACCOUNT NAME: CHIBUZOR TOCHI ONYEMENAM
ACCOUNT NUMBER: 3066880122
After payment, send your full name, email address and topic (i.e. Diesel Supply Business Plan in Nigeria pdf) to 07033378184. Your business plan will be sent to your email within 15 minutes.
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