Opening a simple petrol station

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byro

Village Elder
#1
Some time back, i was suffering from business ideas constipation- you know, when the idea that comes your way is beyond your capabilities. After lots of research, i gave up but not before i thought of maybe giving the details to any talker here who maybe interested.

Ideally this is not those massive filling station you see around, but a pump or two in those populated areas where matatus population to that of human is 1:2. Back to thread; for village billionaires who need to be partners with Total visit; http://www.total.co.ke/
Now to the village millionaires here we go:

Location
your business should be located in a upcountry setting, ae settlement(incase you want a petrol pump for nduthis or kerosine),r in slums in the urban areas or congested urban areas.

Set up your business in an open place by installing your petrol storage tanks underground(as per regulations)and serving your customers in the open or install your tanks underground and serve from an enclosure(for kerosene). Due to health and safety concerns, you are advised to operate from a well ventilated area. Choose a strategically located busy area easily accessible and visible.

Licensing

Ensure that you obtain a business permit (Ksh7,500 – Ksh15,000) , fire certificate and a health certificate for your premises from the county government before you start to operate your kerosene business. You should also install a functional fire extinguisher within the premises.

Before you set up, please remember also to visit National Environmental Authority (NEMA) to confirm whether your kerosene business will need certification or not.
For more visit https://www.wikiprocedure.com/index..._Licence_to_store_Fuel_and_petroleum_products

Supplies

Many of those in this business are supplied by distributors who deliver regular supplied depending on the need. There are a number of distributors such as Petrogas, Mwarabu, K K Kerosene Distributors, just to mention a few. When setting up your kerosene business, just walk to any petrol station in the area and ask for the contacts of the suppliers.

These distributors will commonly expect you to order a minimum of 1,000 litres. Some major dealers order as much as 6,000 litres.

umps and Storage tanks

You will need a pump to dispense fuel to your customers and a tank to store your supplies. You have options of getting a new pump or settling for a refurbished one. Whenever petrol stations close down or renovate, their pumps are sold off. Those who buy them service or refurbish them then sell them off. These are the pumps which end up in many kerosene businesses.

The second hand pumps cost roughly Ksh110,000 – Ksh120,000. A workshop along Outer Ring Road in Umoja one sells these pumps. There are also other dealers on Thika Road. If you have more capital, you can opt to buy a new pump to start with. Just visit P J Petroleum Equipment Ltd, Thika road behind Safari park, just before USIU. for mombasa branch Sparki House along Jomo Kenyatta Avenue. http://www.pjpetroleum.co.ke/
A new pump will cost about about Ksh150,000.

There are many different models of pumps in the market therefore you need to be careful not to buy a cheap one with no spares or after sales support. Brands known to give good service are Wayne, Gilbarco, Tokheim etc.

The storage tanks are also available from those who deal with these pumps. Many of them are also from closed down petrol stations, refurbished and then sold off as second hand. The price of the tank will depend on the storage capacity. There are a number of kerosene dealers who use several 200 litre drums as storage tanks to avoid buying the bigger tanks.

Sales depends on your location and what's your commodity, i wont give you much hype about sales. This is not quail business!

Employees

You will need an employee or an assistant to help with the sales in your business. This is a cash business and sometimes you will handle very small denomination (coins). You will therefore need a very trustworthy and reliable person to assist you with the business.

Salaries for staff vary but an average of about 9k per month.

Challenges

Your fuel business will face some challenges mostly attributed to your distributors and regulations. Some distributors may not be honest enough to supply you with the exact amount you ordered and paid for. If you are not careful, they may deliver less than you paid for and you will be surprised when you end up with losses.

Sometimes regulations given by Energy Regulatory Commission (ERC) may make you register losses. For example ERC may reduce petrol prices when you still have a bulk of your previous supply at a higher price in your storage tank. In such a case, you will be forced to sell at the same price you bought at or even lower, incurring heavy losses.

If you ignore these price directives, you may end up paying heavy fines if caught, therefore, be ready to face these challenges without going against the directives.

Finally; Not to sound discouraging but it is quite a hustle. The levels of approval are crazy from one government office to the other and a lot of requirements. *** HOHO guys, they needed too much(boot licking and hongo) for approvals.

Good luck fellow villagers.
 

paparazzi

Village Elder
#2
Hii biashara ina cartels, before you know your way around they will sell you less than what you ordered, adulterated fuel etc but it's generally a good biz apart from the few hiccups.
 

byro

Village Elder
#4
Hii biashara ina cartels, before you know your way around they will sell you less than what you ordered, adulterated fuel etc but it's generally a good biz apart from the few hiccups.
better yule anafika kwa adulterated fuel. Going through the approvals hii Mombasa needed a lot of cash than even the business capital. after even trying to use the only contacts i had, i was already dry. sold the machines off but at less 5k.
 

Tarantinoh

Village Sponsor
#6
If I may ask, where can I source the kerosene?, I am interested in starting one in a rural center. As in can you provide the numbers or website of a petrolgas, would like to try the 200lts tank for a start.
 

byro

Village Elder
#10
Kindly share a breakdown of costs please
I don't exactly understand if you want to be a manufacturer, distributor, retailer or a re-filler but i will share for a retailer start up maybe will help other villagers.
The amount estimate around 300k-400k according to capacity.

Equipment and Gas- ur starting amount for buying the first consignment of cylinders and gas can range between Sh150,000 and Sh300,000 depending on the area, your budget and combination of cylinder capacities.
If your initial budget allows, you can buy a trolley, bicycle or a motor bike for home deliveries, as an added value to your customers=6k

License- As usual, you will be required to acquire a business license, fire license and health license (non-food) from the county government. All these will range between Sh15,000 and Sh20,000 depending on size and location. For you to qualify for the licensing you must have a cage to store the cylinders and a fire extinguisher installed. An extra Sh20,000 will secure you a cage and a fire extinguisher.

You are also required to get a license from Energy Regulatory Commission (ERC) after meeting certain conditions, which will include having a certified weighing machine, a supply agreement with a licensed supplier, among others. Certification of the scale is done by the Department of Weights & Measures (Ministry of Trade). For more check /visit http://www.erc.go.ke/
challenges
-unexpected fluctuation of gas prices.
-Theft
-constant harassment by authorities especially the ERC officials, since the licensing guidelines are very strict and not many retailers meet all the conditions(bribes).

Gas business is very lucrative, especially when combined with other businesses such as M-pesa business, retail shop or a small hardware shop.
Total cost estimate=350k-400k

For refilling of gas cylinders kindly inquire from this guy 0721930887 -Kim (don't know if hes still in the biz)
 

4makind

Village Elder
#11
I don't exactly understand if you want to be a manufacturer, distributor, retailer or a re-filler but i will share for a retailer start up maybe will help other villagers.
The amount estimate around 300k-400k according to capacity.

Equipment and Gas- ur starting amount for buying the first consignment of cylinders and gas can range between Sh150,000 and Sh300,000 depending on the area, your budget and combination of cylinder capacities.
If your initial budget allows, you can buy a trolley, bicycle or a motor bike for home deliveries, as an added value to your customers=6k

License- As usual, you will be required to acquire a business license, fire license and health license (non-food) from the county government. All these will range between Sh15,000 and Sh20,000 depending on size and location. For you to qualify for the licensing you must have a cage to store the cylinders and a fire extinguisher installed. An extra Sh20,000 will secure you a cage and a fire extinguisher.

You are also required to get a license from Energy Regulatory Commission (ERC) after meeting certain conditions, which will include having a certified weighing machine, a supply agreement with a licensed supplier, among others. Certification of the scale is done by the Department of Weights & Measures (Ministry of Trade). For more check /visit http://www.erc.go.ke/
challenges
-unexpected fluctuation of gas prices.
-Theft
-constant harassment by authorities especially the ERC officials, since the licensing guidelines are very strict and not many retailers meet all the conditions(bribes).

Gas business is very lucrative, especially when combined with other businesses such as M-pesa business, retail shop or a small hardware shop.
Total cost estimate=350k-400k

For refilling of gas cylinders kindly inquire from this guy 0721930887 -Kim (don't know if hes still in the biz)
Many thanks sir for taking the time to share all these details. I will hit your inbox for more
 

Simiyu22

Village Sponsor
#13
350k-400k? Really
You forgot:
Total Kenya charges you a franchise fee to sell their wares in their name.
Rent? Do you know how much rent is in the slums for small petrol station. If you can even find the land. Just to help you a small duka in the slum charges 25 k a month for a small room on the ground floor. Imagine a gas station. 8-10 times that size. A month.
Stima?
When you start a business, its a good idea to assume you will have low or no sales for at least 6 months. So you need money to cover that beginning portion.
And coupling with MPesa. Mpesa has its requirements in terms of capital. Everyone wants to do Mpesa. There is a reason they cant-trust me.
My estimate if your above assumptions are practical is 8-10 m. Minimum.
 
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