How To Start A Kerosene Business In Nigeria As A Major Depot Distributor

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First of all, I wish all of you Happy New Year. I hope you enjoy last Christmas and New Year? When we enter New Year in 2014, what is your New Year’s resolution? Write it and plan now.

Let me tell you that Dual Purpose Kerosene is probably in highest market demand and per-litre profit of the commonly used petroleum products, PMS, AGO and DPK. The DPK is used for cooking and household domestic purposes e.g, lighting.

Even if cooking gas is used at home, a kerosene store is usually maintained, in case that cooking gas is empty. Kerosene business is very lucrative any body can lay their hands on either small or large scale.

But if you want to become a major kerosene player in the oil industry and make quick cash daily, you must have large capital to invest in as a major player. The following numbers that will get you started a kerosene business.

No.1:  Obtain A License

You must obtain a license from any DPR office closest to you. 

The Department of Petroleum Resources (DPR) of the license issued in the Ministry of Petroleum is the government agency that handles all matters pertaining to issuance of licenses and permits for operators in the oil industry.

No.2:  Supporting Documents 

You must have some supporting documents. It should be like VAT (valued Added Tax) certificate, Tax Clearance (for three years) and a bank draft for the license fees (either new or renewed). If so, then take it to the office for the application for kerosene license.

No.3:  Get A Space For Store 

When get a license from the DPR office, you are allowed to sell more than 10,000 litres of kerosene in your (residential) store. 

But you are not allowed to store more than 10,000 or 33,000 litres in your residential compound unless you get a land for it or partner with any big quoted company like Fort Oil, etc of your choice as an oil player.

  

No.4: Get A Fire Extinguisher 

You need a fire extinguisher and other fire safety measures devices if you want to purchase and store than 33,000 litres of kerosene. 

No.5: Become A STO Kerosene Distributor 

And you can partner with either a filling station category or surface tank operators as a distributing player. 

The filling station category means owners/ or operators like Texaco, Fort Oil, Total, Mobil, Conoil, Oando, etc and the Surface Tank Operators means peddlers/ surface tank operators.

However, for Surface Tank Operators (STO), it is easy for you to start with less capital intensive than the filling station category. 

If you want to become STO major kerosene distributor, then you are required to enter a product supply arrangement with any filling station of your choice or any of the existing Independent Oil Marketing companies.

When you do, then you will make the payment for your product into the sponsoring company’s account, and they will handle loading and transportation of the product for you. 

Petroleum Products Pricing Regulatory Agency (PPPRA), Nigerian National Petroleum Corporation (NNPC) and NUPENG are in pricing war. 

Maybe, PPPRA sell a litre of kerosene for just #90, NUPENG sell it to buyers for just #80 and NNPC sell it for real #50 because Government have paid for it. 

If you often read it in the paper, you will see the pricing war. Better ask them about the cost first before you decide.

If you know for example, that there is no oil in Maiduguri and you boldly take risk by commanding high PEF which is called Petroleum Equalization Fund from Apapa, Lagos to Maiduguri for oil business, you will be compensated by the Federal Government. If you want it, go for it.

Final Thoughts

I hope you enjoy this article? Any comments? You are welcome to drop your comment here and I want to hear from you.

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