Unless you use a bicycle or a camel for your mobility, you are definitely a consumer (well, I don’t mean in the edible sense) of petroleum products either directly, using your own car, or indirectly using public transport. What does that mean? That the market for petroleum products is a mammoth one, you can have a slice of it and make huge income within a short time of setting it up. Have I piqued your interest? Good, because that’s why I’ve put together this post on how to start a petrol station in Nigeria.
- Compulsory Facilities for A Petrol Station
- First Stage: Company Registration
- Second Stage: Land Acquisition and Obtaining of Relevant Documents for Application to Department of Petroleum Resources (DPR)
- Third Stage: Petroleum Pipeline Marketing Company (PPMC) Applications
- Fourth Stage: Depot Operations
- Stage Five: Petrol Station Operations
- Taking Over an Already Existing Petrol Station
- Challenges In Running a Petrol Station Business
- How to Prevent Sabotage of fuel by its handlers after loading from the depot and finally getting to its destination.
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Compulsory Facilities for A Petrol Station
Let’s start by giving you an overview of the basic facilities that would be needed for the petrol station.
1. A Fore Court where customers drive IN and OUT to purchase petroleum products and of course, it’s where sale attendants cater to customers.
2. Bound wall fencing that demarcates the filling station from its neighbors. This fencing is usually of a height not less than 1.2 meters.
3. Filling Station Building expected to house an office, convenience, store and other needs of the station.
4. Power for operating the electronic fuel dispensers.
5. Minimum of four to six pumps for dispensing the petroleum products. If funds are low, with as little as two hundred and fifty thousand-naira (250,000) to four hundred thousand (400,000) naira, you could get fairly used pumps. But if you’re fixed on getting new ones, you should budget between 600,000 and one million naira. Popular brands you might want to look out for are MAGIC-FX and WAYNE series.
6. Safety and warning signs like “No Smoking.” These signs should be set up in such a way that it does not reflect the sun into the face of customers patronizing your petrol station. Also, the signs should be large enough so that they can be seen from a reasonable distance and at a reasonable speed.
7. Safety devices like fire extinguishers and dry sand buckets in adequate numbers should be placed at strategic locations in the filling station.
8. A well-stocked first aid box for emergencies. Staff should also be trained on how to handle emergencies.
9. Storage and dispensing facilities which include underground tanks, oil tankers, etc. At least four underground tanks (each 30,000L-45,000L) will be needed for a smooth operation. To save on costs, you could hire a local welder to make your tanks for you, but bear in mind you could be spending about five hundred thousand (N500,000) on each underground tank, more or less. These storage facilities when being constructed must be double lined to prevent leakage of petroleum products into the ground thereby contaminating the environment.
10. Water borehole system dispensing well-treated water at strategic locations.
11. Air compressor and air gauge in excellent working conditions.
12. Refuse containers or waste baskets placed at strategic locations around the petrol station to keep it hygienic.
13. Finally, well-trained staff attired in appropriate safety gear.
First Stage: Company Registration
Before you begin anything, you need to get your business registered first. A limited liability company (LLC) registered with Corporate Affairs Commission (CAC) is the way to go. Retaining a lawyer is the best approach to prevent complications down the road for your business which could end in fines or even legal actions. Bear in mind that registering a Limited Liability Company requires a minimum share capital of five hundred thousand naira (N500,000). Your lawyer would help in drafting all necessary documents to facilitate your registration.
Second Stage: Land Acquisition and Obtaining of Relevant Documents for Application to Department of Petroleum Resources (DPR)
You need a land for your petrol station which must be located in a strategic place and also easily accessible. Busy, heavy traffic routes are the best option. Depending on the size you’re aiming at, you’ll need at least two plots of land. The location for the petrol station is required by law to be at least 500 ft. away from public institutions such as schools, hospitals, churches, parks, playgrounds, etc. Also, the station’s real estate must be wide enough to accommodate the coming and goings of vehicles. Areas for vehicular access, egress and crossover should be free of hazards especially in a station situated close to main roads and intersections.
The next step after getting your land is to hire a professional surveyor to carry out the land survey and building plan in collaboration with an architect. Pay the full cost for competent hands, you don’t want to cut corners and then have an expensive mistake to deal with in the future. The result of the work of the surveyor and architect will be used to obtain a building plan and permission to build your filling station from the Department of Petroleum Resources (DPR). One important feature of the land which your surveyor will help discover is if the land is sloppy or level. Setting up a petrol station on a sloppy rather than level site is dangerous and susceptible to objects rolling and causing accidents. Paving of the site will get rid of dust nuisance. Since petrol stations are usually situated on major roads or highways, obtaining a police report is important. The essence of the police report is that your filling station will not worsen traffic situations, cause hardship to motorists on a tight curve that consequentially blocks visibility.
Please, before you commence building, you’ll need to obtain a Letter of Approval from the town planning authority of the area your filling station is located. Without this, you could get visited one morning and asked to suspend building. One most common risk/ hazards with setting up and running a filling station is fire. As a safeguard, you must obtain an Original Fire Certificate duly signed by the chief fire officer of the state where your petrol station is located. The certificate will only be signed if the chief is satisfied that your fire prevention plan is up to standard. If your company has been in operation for over three years, you’ll need to obtain a Tax Clearance Certificate for the three years before your application, if for less than three years, a one-year tax clearance certificate will do.
All the highlighted documents above are what you’ll need for your application to DPR. The application is written in the company’s letter-headed paper and submitted at DPR’s office. Upon completion of the filling station building, you can now apply to obtain a Storage License from DPR. Documents required are the same as those already mentioned above including Survey Plan, Company’s Memorandum and Articles of Association and Leak Proof Test for the storage tanks.
Third Stage: Petroleum Pipeline Marketing Company (PPMC) Applications
After obtaining a storage license from DPR, your next task is to apply to PPMC for lifting rights and bulk purchase agreements. You’ll need the documents listed below for a successful application.
1. The storage and sale license earlier issued to you for the filling station by DPR.
2. Your company’s certificate of incorporation, memorandum, and articles of association.
3. Tax clearance certificate for the past three years or one year.
4. Certificate of occupancy for the land being used for the petrol station. Customary right of Occupancy is also accepted.
5. Approved building plan from town planning.
6. Letter of Introduction from your company’s bank.
7. Fire Report/ Certificate duly signed by the Fire Chief.
8. Police report approving the location of the petrol station duly signed by a Police Commissioner or other High-Ranking Officer.
9. Enlarged coloured photographs of the petrol filling station showing clearly the IN and OUT signs, including other safety and warning signs.
10. Enlarged coloured photographs and particulars of the trucks to be used. Ensure these trucks are bearing the company’s name and logo.
11. Verification report on the petrol station issued by PPMC.
12. Finally, as a petroleum products marketer, to successfully apply for the bulk purchase right and lifting right, all the above-listed documents must be presented along with the Marketer’s form and Letter.
Fourth Stage: Depot Operations
After obtaining your storage license, bulk purchase agreement and lifting rights from PPMC, you will be given allocation to lift petroleum products from any of the NNPC depots. Petroleum products available include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), popularly known as diesel, Dual Purpose Kerosene (DPK) and LPFO.
Below is a brief list of some major NNPC loading depots.
1. Suleja Depot, Abuja
2. Benin Depot Benin City
3. Markudi Depot
4. Warri Depot Warri
5. Enugu Depot
6. Gombe Depot
7. Ilorin Depot Ilorin
8. Ibadan Depot Ibadan
9. Owerri Depot
10. Kaduna Depot
11. Kano Depot
12. Satellite Depot Ejigbo, Lagos
13. Maiduguri Depot
14. Minna Depot
15. Mosimi Depot Shagamu
16. Ore Depot Ore Ondo Gate
17. Port Harcourt Depot
Just in case you’ve got several outlets and the ones listed above cannot meet your needs, there are some private depots located in Apapa, Lagos. Some of them are Ascorn, Honeywell, Ibeto, MRS, NIPCO, Obat and Zenon. To facilitate easy marketing for your petrol station business, having an office space within NNPC premises is crucial. There are several office sharing arrangements, so you won’t need to break the bank for that.
To ensure you have a steady flow of products for your petrol station, hiring a depot representative in each depot or in as many depots as possible which are close to your location. Your depot representative will be the one to issue payments in bank drafts to NNPC or the private depot on your company’s behalf.
Stage Five: Petrol Station Operations
Here are activities you can expect at the petrol station.
The higher the volume of sales, of course, the higher your profit.
Location has a lot to do with the volume of sales. You can’t compare sales in a remote place to sales at a busy, high traffic area.
Proper training of staff in how to handle products and customers also plays a role in the successful running of the petrol station. Upon arrival of a loading truck from a depot to the petrol station, the officer in charge, usually the Managing Director takes the haulage of the products to ensure it corresponds to the figure sent by the depot representative. This is after letting the truck sit for a while for the products it’s carrying to settle down to normal level. After the confirmation, the products are discharged into the underground storage while also monitored to ensure discharged haulage corresponds with records. The proper functioning and operation of a petrol station require the following qualified personnel: a managing director, a general manager, accounts officer, sales attendants and marketing personnel, maintenance and drivers. The accounts officer should be one with honesty and integrity, while also being able to critically monitor the happenings around the petrol station so as to nip fraudulent practices of sales attendants and other staff in the bud. Sales attendants and marketing personnel need the following items for proper functioning: daily sales record, invoice, waybills, POS machines for customers using credit/debit cards and receipts.Personnel in the maintenance department are responsible for servicing and maintaining the working conditions of the pumps. Depending on budget, you could employ a mechanic full time or part-time. Company’s drivers responsible for driving the trucks are also members of the maintenance department.
Taking Over an Already Existing Petrol Station
Some persons would prefer to invest in an already existing petrol station. The process of taking over is fairly simple. Application to DPR and PPMC with all the documents mentioned above. Retaining a lawyer to handle this would be easier and help avoid some unnecessary complications in the future.
Challenges In Running a Petrol Station Business
There is nothing without a challenge, but being prepared for any challenge is better.
Some challenges someone venturing into the petrol station business is bound to face include:
1. Substandard, adulterated or contaminated petroleum products.
2. Shortage in haulage and sabotage of the fuel by the handlers such as drivers before it gets to its destination.
3. Delay in supply/ delivery of petroleum products.
4. Armed robbery and theft of trucks during transit.
5. Armed robbery and theft at the petrol station.
6. Fire outbreaks.
7. Accidents involving trucks.
How to Prevent Sabotage of fuel by its handlers after loading from the depot and finally getting to its destination.
One of the headaches of Petroleum products marketers and bulk Suppliers is the shortage and sabotage of products before they get to destination filling stations. A lot of time, they, the Suppliers bear the loss if there is any shortage after delivering the product.
Solution to that is to get your Depot Reps seal the outlets and compartments of your trucks with plastic or cable seals after loading in the depot. The best is to use the cable seal as it can only be broken with pliers and cable cutters. These cable seals come with serial numbers which should be written on the waybill after loading. The receiving manager is expected to cross check the serial numbers of the cables used and the numbers written on the waybill. This is important as it will help him to know if the product has not been tampered with while being transported to the station. The cable seals can be bought at the depot or you can call (07055321367) for customization with your company name and bulk buying. Buying in bulk is cheaper and better as the seals are customized with your company name and also selected serial numbers. One tip to avoiding substandard, adulterated and contaminated products or at best-claiming refund is by monitoring the marketer through: name and address of the marketer supplying the particular load, name, and address of transporter supplying the particular load, registration number of truck transporting the particular load, date of calibration of compartment tank heights, along with the name, address, stamp and signature of the approved calibration firm and haulage certificate number.
Starting a petrol station in Nigeria is a very lucrative business. Although it involves high capital, it is an investment that is bound to yield huge profits. Why not get started today?