Feasibility Report On The Supply Of Low Pour Fuel Oil (LPFO) To Local Industries And Factories In Nigeria.

Petroleum products are among the most valuable natural resources abundantly available in our country. Nigerians and people everywhere use petroleum products as a fuel in their automobiles, generating sets, industrial plants and for cooking purposes, thus making petroleum products an essential commodity that is needed for the daily operations of individual, industrial and national activities.

Nigeria being an oil producing nation however still relies on imported petroleum products for the servicing of the economy. Such petroleum products as Petrol (PMS), Low Pour Fuel Oil (LPFO), Diesel (AGO) and kerosene (DPK) are products utilized by almost everybody on daily basis at an average of sixty (60,000,000) million litres daily usage.

Fuel oil (also known as heavy oil, marine fuel or furnace oil) is a fraction obtained from petroleum distillation, either as a distillate or a residue.

In general terms, fuel oil is any liquid fuel that is burned in a furnace or boiler for the generation of heat or used in an engine for the generation of power, except oils having a flash point of approximately 42 °C (108 °F) and oils burned in cotton or wool-wick burners. Fuel oil is made of long hydrocarbon chains, particularly alkanes, cycloalkanes and aromatics.

The term fuel oil is also used in a stricter sense to refer only to the heaviest commercial fuel that can be obtained from crude oil, i.e., heavier than gasoline and naphtha.

Low pour fuel oil (LPFO), also known as black oil is a fundamental input in steam generation in many labour intensive industries like textiles, construction, food and beverages.

The acute shortage of low pour fuel oil (LPFO) mostly used by industries and power generating plants is currently threatening the survival of many companies.

Due to constant attacks on pipelines, availability of gas to the industrial sector has become a challenge, thus making the use of low pour fuel oil (LPFO) by industries predominant. In the absence of gas, due to the constant attacks on pipelines, most of the manufacturing outfits have found an algernative in the use of low pour fuel oil (LPFO) to power their plants.

However, due to the inability of the country’s two refineries located in Kaduna and Warri to continue with the production of low pour fuel oil (LPFO), many companies are now battling with production hitches as a result of the scarcity.

The product would be sourced from tank farms / depot and same would be supplied to breweries, cement industries, shipping companies etc.

The company would start operations with two (2) fairly used Daf xf 95 euro 2009 – 2011 with forty thousand (40,000) ltrs capacity tank, each making two (2) deliveries of forty thousand (40,000) litres each of low pour fuel oil (LPFO) in a week.

This report highlights the financial viability or otherwise of establishing a Low Pour Fuel Oil (LPFO) supply and distribution company in Nigeria.

Table of Contents

EXECUTIVE SUMMARY 1.0 Business Overview 1.1 Description of the Business 1.2 Vision and Mission Statement 1.3 Business Objective 1.4 Critical Success Factor of the Business 1.5 Current Status of Business 1.6 Description of the Business Industry 1.7 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of product 2.2 The Opportunity 2.3 Pricing Strategy 2.4 Target Market 2.5 Distribution and Delivery Strategy 2.6 Promotional Strategy 2.7 Competition 3. Production Plan 3.1 Description of the Location 3.2 Raw Materials 3.3 Equipment 3.4 Production Cost 3.5 Stock Control Process 3.6 Pre-Operating activities and expenses 3.6.1 Operating Activities and Expenses 3.7Project Implementation Schedule 4.0 Organizational and Management Plan 4.1 Ownership of the business 4.2 Profile of the promoters 4.3 Key Management Staff 4.3.2 Management Support Units 4.4 Details of salary schedule 5. Financial Plan 5.1 Financial Assumption 5.2 Start up Capital Estimation 5.3 Source of Capital 5.4 Security of Loan 5.5 Loan Repayment Plan 5.6 Profit and Loss Account 5.7 Cash Flow Analysis 5.7 Viability Analysis 6.0 Business Risk and mitigation factor 6.1 Business Risks 6.2 SWOT Analysis

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