Liquefied Petroleum Gas (LPG) Cylinder Production in Nigeria; The Feasibility Report.

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.

Undoubtedly a vast investment potential exists in the domestic liquefied petroleum gas filling sub-sector of the Oil & Gas Industry in Nigeria. A large proportion of the middle and upper socio-economic class of people depend on gas for cooking purposes. So are industries, government establishments, hotels, hospitals, restaurants, bakeries e.t.c

A statistic for the country some years ago showed that a mere 5% of the consumption potentials of liquefied petroleum gas (LPG) were attained. It is therefore evident that we have a long way to saturate the Nigeria LPG Market if it were to be fully developed because if a domestic consumer is sure of getting liquefied petroleum gas (LPG) when and where he needs it at the right price, he would most willingly convert from firewood, coal or kerosene to liquefied petroleum gas (LPG).

With huge gas reserves of 185 trillion cubic feet and the Nigerian government’s strong commitment to developing the gas industry through the Gas Master Plan, there are a lot of emerging opportunities for investors in the sub- sector.
With less than one kilogram me per capita consumption, Nigeria ranks among the lowest liquefied petroleum gas consuming states in Africa despite its huge gas resources.

Today, Nigeria consumes about 110, 000MT per annum and we have about 130 liquefied petroleum gas (LPG) plants and 7,000 retailing outlets. If we can move the consumption level up to 750,000MT per annum, we expect to have about 250 liquefied petroleum gas (LPG) plants and 74,970 retailing outlets.

More succinctly, a captive market of over 165 million people makes investment in liquefied petroleum gas (LPG) bottling plant viable since one of the challenges the Federal Government as well as liquefied petroleum gas (LPG) operators are forced to grapple with is how to popularize the use of cooking gas in Nigeria.

Following the unprecedented demand for liquefied petroleum gas (LPG) in Nigeria and attendant scarcity of the product which has resulted in sharp and arbitrary price increases, the distribution of gas products has been deregulated.

Consequently, this has opened – up a lot of opportunities in the industry and one of such opportunities is the production of liquefied petroleum gas (LPG) cylinder in Nigeria.

Local gas cylinder manufacturing scheme is supported by section 53 of the Nigerian Content Act, which prohibits the importation of welded steel products.

LPG Cylinder is an essential item for filling liquefied petroleum gas used for cooling purpose. The body of LPG cylinder is deep drawn in two pieces then these are welded together to make a compact unit without any leak and defect etc. LPG cylinders are in use in 3 KG, 6.25 KG, 12.5 KG and 50 KG capacities. Though the plant can produce different sizes of the product, we would use 12.5 KG as the reference in the this report.

To ascertain the quality, safety and performance certain regulations are applicable such as NIS 69: 2006 standardization. About 2.5 mn cylinders are estimated to be in the country and over 70% of this volume are imported.

The capacity of the proposed plant is one hundred (100) pcs per hour of 12.5 KG Liquefied Petroleum Gas (LPG) cylinder and the plant would operate at 75% installed capacity for 8 hours shift per day working for 300 days per annum.

This report highlights the step-by-step procedure required for the setting up of a Liquefied Petroleum Gas (LPG) cylinder production plant in Nigeria using steel coils as raw materials.

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 Value Proposition 1.5 Critical Success Factor of the Business 1.6 Current Status of Business 1.7 Description of the Business Industry 1.8 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of product 2.2 Product Packaging and delivery 2.3 The Opportunity 2.4 Pricing Strategy 2.5 Target Market 2.6 Distribution and Delivery Strategy 2.7 Promotional Strategy 2.8 Competition 3. Production Plan 3.1 Description of the Location 3.2 Raw Materials 3.3 Production Equipment 3.4 Production Process 3.5 Production Cost 3.6 Stock Control Process 3.7 Pre-Operating activities and expenses 3.7.1 Operating Activities and Expenses 3.8 Project 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 Analysis 5.7 Cash flow Analysis 5.8 Viability Analysis 6.0 Business Risk and mitigation factor 6.1 Business Risks 6.2 SWOT Analysis

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