Investing in LPG filling plant

THE PUNCH Newspaper- Dayo Oketola

With less than one kilogramme per capita consumption, Nigeria ranks among the lowest liquefied petroleum gas consuming states in Africa despite its huge gas resources.

The Federal Government, through the former Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, at the last African Summit of the World LP Gas Association, made a pronouncement that Nigeria would develop cooking gas market from the current 70,000 metric tonnes to one million MT per annum by 2015.

Although, the market is currently fraught with decayed infrastructure, the five- year growth projection of the Federal Government, according to experts, will attract investment across the LPG value chain from storage, logistics, to filling plants and cylinders, among others.

The President, Nigerian Liquefied Petroleum Gas Association, Alhaji Auwalu Ilu, says the need to increase LPG consumption in Nigeria cannot be ignored by anyone because of the country’s large latent demand potential and population.

He says, “Today, Nigeria consumes 70,000MT per annum and we have about 130 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 LPG plants and 74,970 retailing outlets.”

More succinctly, a captive market of over 140 million people makes investment in LPG bottling plant viable since one of the challenges the Federal Government as well as LPG operators are forced to grapple with is how to popularise the use of cooking gas in Nigeria.

Experts, therefore, say that forward thinking investors interested in the Nigerian oil and gas industry will make money from building cooking gas filling plants because LPG is a domestic product that will eventually replace kerosene in the country due to its environmental friendly nature.

The Head, Terminals, Depots & Jetties Operations, Department of Petroleum Resources, Mr. Patrick Emordi, says all trading in petroleum products attract appropriate licence and failure to possess valid licence means contraventions of relevant petroleum regulations and often attract sanctions.

According to him, anybody willing to invest in LPG filling plants must submit an application for approval to construct the plant to the DPR giving details of the proposal and any information that may be relevant to the project.

He says there must be evidence that the company applying for DPR approval is duly registered as a limited liability company by the appropriate Federal Ministry to deal in petroleum products.

Other documents that must be attached to the application, according to Emordi, include tax receipts or Tax Clearance Certificate for the preceding years.

He says, “Three copies of a plan showing the buildings existing or proposed on the site and the relation of the site to the roadways and adjoining property must be submitted along with the application. Also required is a certificate signed by the Chief Federal/State Fire Officer or an officer authorised in that behalf showing that the arrangements proposed for the prevention of fire at the site are satisfactory. ”

Emordi, also says a certificate by the Area/Town Planning Authority for the construction of a filling plant on the proposed site is also essential.

“A certificate signed by the Divisional Police Officer or Superior Police Officer in-charge of the police motor traffic that he is satisfied that the site and in/out of the proposed LPG plant will not constitute an unnecessary traffic hazard,” he says.

Environmental Impact Assessment of the plant must also be submitted to the DPR before approval can be granted.

He says, “After the relevant documents have been submitted, inspection of the site will then be arranged. Approval to construct will be granted by the DPR if the proposed site fulfils the conditions stipulated in the relevant sections of the petroleum regulations.”

Ilu further notes that getting the licence to build is just the beginning because an investor must also apply for the licence to operate after which he will focus on other ancillary investments.

He notes that an investor must also be ready to invest massively on transportation by purchasing dedicated LPG trucks to ensure that the product gets to the targeted market.

Ilu, however, cautions investors on committing their capital on building LPG filling plant without seeking for requisite knowledge from those already in the business.


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