Fuel Filling Station Business Startup Guide

Fuel (Filling) Station  Business, just like the Bottled Water Business, is strictly for the rich cos it is highly capital intensive. Normally, the startup capital are in multiples of millions especially due to the hurdles that have to be taken care of as well as the assets that are to be put in place. Here, I have researched and put together some information to help entrepreneurs in finding out what is necessary in setting up a fuel filling station business.

From my research, there are basically two options that one can pick from when setting up a fuel filling station:
  • Build A New One
  • Franchise With Existing Companies
Out of the two options mentioned above, Franchise requires less startup cost, but just as with any other business, reserves little control for the franchisee (which is the entrepreneur wishing to start the business). I would however give a fair analysis of both options and leave you to make your choice.

BUILD A NEW ONE
Here, you start from scratch and create your own brand, and fuel station business. That means that every conceivable cost is to be borne solely by the entrepreneur.

Here are some possible considerations:
  1. Road-Side Property: Land, either leased or if available, rented on a (very) busy road. Not usually less than 2 plots of land, according to IPMAN regulations in some states. If you want 6 nozzles, you definitely need 2 plots or more. Also note that there are 4, 3, 2, nozzle types depending on how busy you assess the location of your station. If it is yet to be purchased, this could cost minimum of 25 million Naira, and depends on the site of the property. Remember to budget for extra costs associated with land acquisition.
  2. Size/Capacity of the Filling Station Storage: The underground tanks is estimated at 1.5 million Naira each for a 45,000 litre tank - and that is for a basic tank, not Double Shell like is used in Total. The underground tank can cost you 4.5 to 5.5 million naira for 4 (1 Kerosine, 1 Diesel and 2 for Fuel). Depending the quality/size you want and the workmen involved though.
  3. Dispensing pumps: Dispensing pumps cost from 0.5 - 2 million Naira, depending on the brand - Marathon to Wayne.
  4. Transportation Tanker: You might need around 10 to 12m long, 11,000 litres tanker, and you need at least 2. The small one cost around 5 to 6.5 million Naira.
  5. Construction Cost: 6 nozzles is the highest you can go. For a 6 Nozzle Station (4 Petrol, 1 Kerosene, 1 Diesel): N30,000,000.
  6. Approved Drawing for Filling Station: N1,150,000.
  7. Union Fees: Independent Petroleum Marketers Association of Nigeria IPMAN Approval and Site Registration: N1,200,000, that is about One Million, Two Hundred Thousand Naira Only.
  8. Civil Engineering Cost: N4,000,000 for the project.
Legal Consideration: When seeking for your approval, don't waste your time with a lawyer, find an IPMAN insider, or your approval wont come out until 2050.
The above is totally estimated at 70 million Naira. Also you need to consider other associated costs like that of supply, marketing. Kindly note these and do your research.

You need a vault for the tanks and the vault depends on the terrain: waterlogged, semi waterlogged, dry.

Canopy cost from 5 million Naira depending on the land area.

Piping can either be done with galvanised iron, or flexible plastic piping which is the standard.
Fire extinguishers. Floodlights, you can buy the cheap failure prone Olympia at 11k /unit, or original floodlights which cost from 30-60k.You need plenty of electrical cables. Canopy lights - genuine canopy lights are at least 65/unit

If you intend to host an eatery in your station, then you need a transformer.

Most importantly, you need to engage a professional, or you may wind up doing things three times. And considering the huge cost involved, it would be a wise decision on your part.

FRANCHISE WITH MAJOR MARKETER
Alternatively, you can own a filling station by renting or leasing from a major marketer. This way, you don't have to spend as much as mentioned above. Also, you don't  have to worry about loading products from the depot. Major marketers include Oando, AP, MRS, etc. All in all 20 million Naira should do it with the bulk of the cost being rent which could be for as much as 50 yrs or short lease of 2years. You may meet someone running a station for any major marketer. If everything goes as planned, you will get up to 4 filling stations this way with the same amount of money it takes you to build one from scratch. Business is not an issue of owning, but controlling especially when the project is capital intensive.

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