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PURPOSE OF DOCUMENT
The purpose of this report is to introduce the subject matter and provide a general idea
on the said subject.
All the materials included in this document is based on Data/Information gathered
from various sources And it is based on certain assumptions although due diligence
has been taken to compile this document, the contained information may vary due to
change in any of the concerned factors, and the actual result may differ from the
presented information
FATDEO & ASSOCIATE does not assume any liability for any financial activity or
other loss resulting from this report in consequence of undertaking this activity,
therefore , we advise users of this report to conduct a feasibility study based on actual
project parameters , prospective user of this report is encourage to carry out his/her
own due diligence & gather any information he/she considers necessary for making
informed decision.
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EXECUTIVE SUMMARY
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 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 LPG when and where he needs it at the right price, he would
most willingly convert from firewood, coal or kerosene to 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 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 165 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 popularize the use of cooking gas in
Nigeria.
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Following the unprecedented demand for 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, private individuals and firms can now set
up LPG plants.
This report highlights the step-by-step procedure required for the setting up of a
Liquefied Petroleum Gas {LPG} Storage and Distribution filling station.
According to a world bank report in 2010 over 50 percent of the world‟s population
directly or indirectly depends on hydrocarbon and petroleum products for survival.
The capacity of the proposed LPG storage and distribution facilities would be around 80
tons, whereas, filling capacity would be about 5 tons per day (400 cylinder of 12.5 kg
weight based on 8 hours shift). The required startup capital estimate of the business is N
61,170,000.00 and it would be funded from 30% equity N 18,351,000.00 and 70% loan
42,819,000.00. The loan would be used to finance our purchase on installation of the
production plant and the working capital.
We expect to generate a net profit after tax of N 45,402,320.82 and N 57,149,826.54 in
the first and second year with the repayment plan of two {2} years with moratorium
period of two {2} months. The assumed interest rate for the loan is 25%.
The company is owned by the promoters and the total manpower required to run the
business is about 13 persons comprising of 2 skilled and 11 unskilled workers.
1.0 Project Brief
The objective of this document is to provide information regarding investment
opportunity for starting a LPG (cooking gas) refilling plant in any big city in
Nigeria.
LPG production is a capital intensive business and requires huge investment
depending upon the technology and methodology employed for the extraction
and processing of LPG. However, LPG Marketing and distribution needs
comparatively less investment and can be considered by the Small and Medium
scale investors.
The capacity of the proposed LPG storage and distribution facilities would be
around 80 tons, whereas, filling capacity would be about 5 tons per day (400
cylinder of 12.5 kg weight based on 8 hours shift).
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1.1 Proposed Business Legal Status
The legal status of business tends to play an important role in any setup; the proposed
LPG refilling plant is assumed to operate on as a private limited company. As it is
mandatory for oil and gas companies to incorporate as a limited liability company.
Name Description Requirement to
obtain
Expected
date of issue
Renewal date
Company
Registration
Grants the
holder a right
do business
with the
registered
business name.
It is issued by
Corporate
Affairs
Commission
{CAC}
Details of
company,
company seal,
passport and
statutory fee.
Issued Life
Tax
Registration
{TIN}
Grants the holder
permit to do
business and for
tax collection to
be easy.
Details of
company
Issued Life
1.2 Opportunity Rationale
Nigeria has so many investment opportunities in various sectors, amongst all The oil
and gas sector gas is the most promising for investors .
The Liquefied Petroleum Gas (LPG) offers a tremendous investment opportunity within
the petrochemical industry. The LPG is an industry specifically developed to cater for
the nation‟s industrial and domestic gas requirements. LPG is needed in almost every
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aspect of economic activity. For instance, it is highly demanded by the automotive
industry, manufacturing plants and electricity generation via thermal energy
At the domestic level, most households, particularly the middle and upper classes of the
society now depend on gas for cooking purposes. Hotels, catering outfits, restaurants
and bakers all demand the LPG as an alternative source of energy since the firewood and
kerosene stove are fast becoming obsolete
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.
The Federal Government, through the former Minister of State for Petroleum
Resources, Mrs. Dizieani Madukue , at the last African Summit of the World LP Gas
Association, made a pronouncement that Nigeria would develop cooking gas market
from the current 100,000 metric tones 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 need to increase LPG consumption in Nigeria cannot be ignored by anyone because
of the country‟s large latent demand potential and population.
Today, Nigeria consumes 100, 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 160 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 popularize the use of cooking gas in
Nigeria.
Therefore, 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.
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Following the unprecedented demand for 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, private individuals and firms can now set
up LPG plants.
1.3 Market Entry Timing
There is no specific time for the entry in LPG marketing. After allocation of quota from
the bulk marketer, a marketing company can start its operations immediately as
demand is persistent in urban areas
1.4 Recommended Project Parameters
Capacity Human
resource
Technology location
Storage
Capacity: 80
ton
Cylinder Filling
capacity: 5
ton per day
13 Local and
Imported
Machinery
(German and
USA)
Any urban
City
1.5 Project Cost
The required startup capital estimate of the business is N 61,170,000.00 and it would be
funded from 30% equity N 18,351,000.00 and 70% loan 42,819,000.00.
Project cost IRR NPV (N) Payback period
N61,170,000 28% 22% 2 years
1.6 Break-Down Start-up
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Required Startup Capital Estimate
Items Amount
Pre-operating Expenses 54,650,000.00
Opening Stock 3,750,000.00
Initial Operating Expenses -2months 2,770,000.00
Total Startup Capital Estimated 61,170,000.00
1.7 Project cost
Equity 18,351,000.00 30%
Loan 42,819,000.00 70%
Total 61,170,000.00 100%
2.0 Market
2.1 Sector & Industry Analysis
LPG is a derivative of two large energy industries: natural gas processing and crude oil
refining. When natural gas is extracted from the earth, it is a mixture of several gases
and liquids. Methane, which is sold by gas utilities as “natural gas” constitutes about 90
percent of this mixture. Of the remaining 10 percent, 5 percent is propane and 5 percent
is other gases such as butane and ethane. Before natural gas can be transported or used,
the LP Gases (which are slightly heavier than methane, the major component of natural
gas) are separated out. Depending on the “wetness” of a producing gas field, gas liquids
generally contain 1%-3% of the unprocessed gas stream. Some LP Gases are also trapped
in crude oil. In order to stabilize the crude oil for pipeline or tanker distribution, these
“associated” or “natural gases” are further processed into LP Gas. Worldwide, gas
processing is a source of approximately 60% of LP Gas produced. In crude oil refining,
the LP Gases are the first products produced on the way to making the heavier fuels
such as diesel, jet fuel, fuel oil, and gasoline. Roughly 3% of a typical barrel of crude oil
is refined into LP Gas although as much as 40% of a barrel could be converted into LP
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Gas. Worldwide, crude oil refining is the source for the other 40% of LP Gas supplies
although the ratio between gas processing and refining varies among Petroleum
producing countries.
LP Gas production from these sources is a natural derivative. That means production of
LP Gas is assured since the primary motive for gas processors and refiners is to produce
fuels other than LP Gas but first the LP Gases are produced Although tied to the
production of natural gas and crude oil, LP Gas has its own distinct marketing
advantages and can perform nearly every fuel function of the primary fuels from whichit
is derived.
2.2 Sector Characteristics and Overview
The gas sector has remained the most challenging in the oil and gas industry. The slow
development of domestic gas is due to the huge resources needed to gather and process
associated gas, which has led to flaring of the bulk of the daily gas production (over 200
bcf). Concerned with the loss of revenue and wastage of the nation‟s gas resources, the
environmental impact of gas flaring on the local ecosystem and global warming, the
Federal Government came up with several policy initiatives to end gas flaring. While the
efforts of the FG and industry operators has led to a reduction in percentage of gas
flared, the objective of zero flare is far from being achieved as the industry has missed
the initial target of year 2004, and is currently grappling with challenges of meeting the
revised target of 2008. While the percentage of gas flared compared to production has
reduced from more than 80% in the 1980‟s to less than 33% in 2007, there has been no
real reduction in the total volume flared(approximately 800 billion cf) due to increased
production.
Government aspirations for the gas sector is to attain a balance between domestic and
export gas, achieve delivery of gas to power plants and diversity revenue base by
generating as much revenue from gas as oil.
To achieve these objectives, a three pronged approach was initiated. These are; the
development of a Natural Gas policy, Fiscal Reforms/ Legislative Reviews and a Gas
Master Plan.
The Natural Gas Policy was approved in March 2008 by the President. It is aimed at
promoting a public- private sector partnership for the orderly and rapid
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commercialization of Nigeria‟s natural gas resources for the development and
diversification of the economy. It is aimed at recovering optimum revenue from gas
utilization.
There are five classes of gas, Natural Gas, Liquefied Natural Gas (LNG), Compressed
Natural Gas (CNG), Industrial Gas (IG) and Liquefied Petroleum Gas (LPG). BOC Gas is
the major dealer of Industrial gas, while Gaslink is a major dealer of Compressed
Natural Gas (CNG).For the domestic market, gas is being leveraged as the fuel to power
Nigeria‟s economy. Currently 15 new gas fired power plants are under construction and
will add over 7 gigawatts of electricity to the national grid. The growth in the power
sector is expected to translate to an increase in gas demand from 1 bcfpd in 2007 to
about 3 bcfpd in 2010 representing over 50% annual growth. The fertilizer sector also
has an expected demand of over 1 bcfpd.
Liquefied Petroleum Gas (LPG) is a by-product of natural gas and is usually sold FOB
under a 12-monthcontract. LPG production started in 2003. It consists of refrigerated
grade of commercial propane and commercial butane, which are sold separately.
Condensate exports started in 2000.
In Nigeria the proportion of Propane and Butane in LPG is 70:30. LPG is a long
established, well accepted, but minor component of energy supply in Nigeria. It is used
principally as a cooking fuel in households and in catering. However, LPG is a clean,
versatile fuel with a wide variety of other uses in household, commercial, and industrial
energy applications.
LPG is produced in oil refining and in gas processing. It represents a modest part of
refinery output- typically 2-3 percent. Commercial grade LPG is primarily a mixture of
butane and propane and the ratio of these constituents can vary widely.
Although normally used in gaseous form, LPG is readily transformed to liquid for
storage and transport. Liquid LPG weighs about half as much as water and is much
more energy intensive than in gaseous form. However, these useful attributes come at a
cost in that the LPG container must be robust, and the gas must be drawn from it in a
controlled manner.
Hence, LPG storage and transportation tends to be more expensive than other fuels.
Initially, LPG distribution was handled only by those oil marketing companies with
retail operations in the country. However, they were soon joined by a small group of
"independents" that is, companies whose sole business is the marketing of LPG and the
appliances and equipment associated with its use.
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The petroleum marketers purchased and maintained their own LPG cylinders which
were branded and fitted with their distinctive valve. Consumers were given cylinders
(usually in exchange for a cash deposit) which were refilled by the marketer. The
distinctive valve and ownership of cylinders effectively discouraged consumers from
changing suppliers. That system required that the marketer invest in cylinders to
support those being used by consumers, and thus maintain the supply chain. The
marketer accepted the obligation to maintain the cylinders and had the opportunity to
do so when they were returned to him for refilling.
Market penetration was low, partly because the initial cost (cooker, cylinder deposit,
and LPG fill) was beyond the reach of the majority of Nigerians. This affected the growth
of the market as households prefer relatively cheap alternatives like firewood, coal and
kerosene. In the 1980s, there was growing awareness of social and environmental
problems associated with the dependence on wood fuel, especially in the Northern
states. Given the popularity of LPG with those Nigerian households that had access to it,
the potential for domestic LPG production and its widespread international use in rural
energization, the government initiated a "butanization" program and authorized NNPC
to construct a network of strategic depots for the primary distribution of LPG, which is
managed by PPMC. Nine butanization depots were constructed at strategic locations
throughout Nigeria (at Lagos, Calabar, Enugu, Ibadan, Ilorin, Makurdi, Kano, Gombe
and Gusau). All but one - Apapa, Lagos - were situated alongside existing white products
depots and were to be supplied from the refineries at Kaduna, Warri and Port Harcourt.
A Merox unit was added at Kaduna to enhance the output of LPG.
However, while the white products are supplied to the depots by pipeline, road
transportation was judged the practical mode to transport LPG to the inland
butanization depots. There was an established coastal movement of LPG from the
refineries to the marketers' storage terminals in Lagos port and the butanization depots
at Calabar and Lagos were to be similarly supplied.
Large quantities of LPG are being extracted in gas- processing projects. It must be
acknowledged that the composition of some of the exported product makes it unsuitable
for the local market and the export infrastructure is not readily adaptable to domestic
supply.
The LPG industry comprises the players in the marketing and distribution chain—
traders and shippers, road haulage contractors and manufacturers/vendors of LPG
cylinders, tanks, appliances and ancillary equipment.
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Normally, LPG production is merely incidental to the mainstream operations of the
refineries but often LPG must be removed (to a greater or lesser extent) in order to meet
product specifications, notably that of gasoline, or Petroleum Motor Spirit (PMS).
Therefore, LPG production is primarily a function of crude oil process runs. Surplus
LPG can, when necessary, be flared at the refinery. A refinery may have to be shut down
if certain heavy products cannot be evacuated and storage capacity is exhausted, but not
LPG. This flexibility may influence evacuation priorities to the disadvantage of the LPG
market.(World Bank/Energy Sector Management Assistance Programme (ESMAP)).
The World Health Organisation has estimated that if half of the people in the world
currently cook with solid fuels switch to LPG, it could provide health and productivity
gains of more than $900 billion over the next decade. World Bank estimates the size of
the industry at 500,000 tonnes every year and 2007 consumption at 90,000 tonnes.
Over the past few years, the bulk of Nigeria‟s LPG supply was imported from Amenham
(UK) and the Mediterranean by two companies: Le-Global Gas and Hyson. However it
was insufficient to cater to the growing demand by the local market. The Obasanjo
Regime thus suspended the NLNG‟s sixth train and directed that it improve supply to
the local market. Following which NLNG appointed more companies to lift gas from its
Bonny Plant.
This development has reversed the declining supply of LPG, which was caused largely by
the country‟s dependence on imported gas, with Le Global, controlling about 80% of the
supply.
This explains the reason why the former President Olusegun Obasanjo directed the
NLNG to suspend the sixth export train and commence the supply of LPG to the
domestic market. NLNG was expected to provide a mother ship capable of lifting LPG
from its jetty in Bonny to other smaller vessels that will move the products to the city
ports like Lagos, Port Harcourt, Warri and Calabar.
NLNG obtains most of its natural gas supplies from Shell, produces LPG and supplies to
the domestic consumers through six off-takers. The following companies are the
suppliers of LPG to the local Market:
• Hyson, a subsidiary of NNPC
• Le Global Oil and Gas Limited
• Chimons Simeons
• Linetrade
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• Harig Gas
• Greenfield International Energy Services Limited
There are 210 major bottlers, of which 70 are presently active and about 1,000 retailers.
Total is the major player among the retailers. The bottling plant is easy to set up. Hence,
the industry has many bottlers. Thirty percent of the LPG bottling activities are
controlled by three major oil companies. These are Total, AP and Oando. While the
remaining 70% is carried out by Independent players, among these are, Technogas,
Hydros and Smartgas. Smartgas is the only independent bottler operating retail
marketing.
The major marketers have about 100,000 to 200,000 LPG cylinders. In recent times,
price of LPG has gone way beyond the reach of the average Nigerian. The steady
increase in prices of LPG since the 1990s continues to be the biggest problem to its
growth.
However, as at May 2008, the cost of a 12.5kg cylinder cost about N2, 500; a decrease
from N5,000 before NLNG started production. Nigeria has the lowest consumption of
the product in the West African sub-region.
Problems which have afflicted the Nigerian LPG sector have included ailing refineries,
inadequate seaport facilities to receive large gas laden ships, lack of appropriate
regulation, unreliable and erratic supply, high cost of gas compression and the
downright non-availability of LPG at affordable prices, for the low income group. The
problems also include unethical and bad practices, which discourage genuine private
investment in gas production and distribution.
In March 2008, the President approved the New National Gas Pricing Policy. The New
National Gas Policy aims to improve infrastructure, clarify the legal framework and shift
the focus from exports to domestic consumption. The policy aims to ensure short and
long term gas availability at affordable prices, for all domestic consumption and for
sectors that have significant multiplier effects on the national economy.
The new policy for the country‟s strategic industrial sector, comprising industries that
require gas as their main feedstock such as fertiliser and methanol producers, is
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expected to make such industries as competitive as their counterparts in other low-cost
gas producing countries.
The new gas policy further stipulates that all operators in the country‟s oil industry must
realign their gas development portfolios in order to ensure that gas resources which are
rich in natural gas liquids (NGL), including condensate and LPG, are preferentially
deployed for domestic use rather than export. All oil & gas developers in the country are
expected to allocate a specified amount of gas from their reserves and annual production
to the domestic market.
A Department of Gas is to be established in the Federal Ministry of Energy to oversee
the implementation of the new gas policy and regulations.
2.3 Market Information
2.3.1 Current Market
Currently out of 150million households in Nigeria, 7 million rely on LPG, and the rest on
conventional fuels like coal, firewood, kerosene, dung cake etc, which indicate the strong
demand for Liquefied Petroleum Gas (LPG) sector.
2.3.2 Market Demand
LPG demand in Nigeria is largely dependent on the price on HHK (house hold
kerosene)Current DAILY demand for LPG in Nigeria is put at 192,000KG per
day15,360 cylinders of 12.5kg capacity per day ,or 21 .875 litres
2.3.3 Supply & Product Pricing
Nigeria Current Status: Supply & Pricing
Until the year 2000, all domestic LPG was provided by the refineries. This LPG
was largely butane rich LPG (>90%).Butane LPG prices ex-refinery was in the
region of N 40,000 per ton. Domestic cooking gas sold at Naira 400 per 12.5 kg
cylinder.
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From year 2000 onwards, because the refineries were epileptic, prices of refinery
LPG gradually shot up to N 90,000 per ton. Domestic cooking gas sold at Naira
1,500 per 12.5 kg cylinder
By 2006, refineries were almost shutdown. Consequently LPG prices shot up
further to Naira 150,000 per ton. Hyson and Lee Global started LPG importation.
Imported LPG attracts 40 % duty.
By 2007, prices became astronomical- up to Naira 250,000 per ton. LPG for
cooking gas retailed at more than Naira 3,000 per 12.5 kg cylinder. Domestic
LPG consumption dropped dramatically.
In 2008, NLNG butane LPG was available through 6 off takers at a price of
around Naira 150,000 per ton ex Lagos PPMC depot.
With the arrival of NIPCO PLC, LPG is now available at around Naira 100,000
per ton ex-Lagos depot
3.0 Raw Material Requirement
The only raw material for the LPG marketing and distribution business would be LPG.
For the proposed project, about 5 ton of LPG will be required as raw material on daily
basis at initial stages of the project. The requirement of LPG would increase by 10%
annually with an increase in supply with the same proportion.
4.0 Plant & Machinery Requirement
Machinery required for the LPG distribution plant would include the following:
No Machine Required
no of unit
Unit price Total cost
In naira
Local/
imported
1 Storage
tanks(
40ton)
2 4,000,000 Local
2 Filling
dispenser
4 500,000 Imported
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3 pumps 2 1,100,000 Imported
4 cylinders
5 Support
structures (
piping and
valves)
Imported
6 Fire
equipment
Local
Total 19,850,000
There are few local suppliers/ manufacturer of storage Tanks and other related
machinery for LPG distribution setup. During the course of study for this pre-
Feasibility, we have contacted the following local manufacturer and fabricator of LPG
distribution setup
5.0Technical & Regulatory Requirement
5.1 Procedure& Requirements For The Grant Of approval To Construct And
Operate A Liquefied Petroleum Gas (Lpg) Plant.
Application Procedure
In accordance with Part VI Section Sub 87 -section (2) of the Petroleum Regulation
1967, Petroleum Gas plant or installation shall be constructed or modified without
approval granted by the Director of Petroleum Resources.
Accordingly, all applications for approval to construct/modified a Liquefied Petroleum
Gas plant or installation shall be addressed to the Director of Petroleum Resources, 7,
Kofo Abayomi Street, Victoria Island, Lagos, Nigeria giving full details of the proposals.
Each application shall be accompanied by three copies of the following:
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Detailed approved plans drawings showing the existing or proposed buildings on
the site and the relative distances to the roadways and adjoining properties.
Piping and instrumentation diagram of the Gas filling Plant and Sectional design
drawings of the storage tanks.
Certificate signed by the Chief Federal/State Fire Officer or an officer authorized
by him in that behalf, that he is satisfied with the proposed arrangements for the
prevention of fire.
A letter from the appropriate Town Planning Authority, authorizing sitting of the
Liquefied Petroleum Gas filling plant at the proposed arrangements for the
prevention of fire.
An evidence that the company is duly incorporated by the Federal Ministry of
Trade to deal in Petroleum products.
A current 3-year tax clearance certificate. Codes, Standards and Specifications
adopted in the design of the tanks.
Non-Destructive Examination report or Pressure test report of storage (Pressure)
tank.
Please note that an application fee of N10, 000.00 in Bank Draft drawn in favor of
"Federal Government of Nigeria, DPR Fees Account" is payable on submission
B. Regulations And Conditions Governing The Construction Of Liquefied Petroleum Gas
(Lpg) Bottling/Filling Plant.
Introduction
Liquefied Petroleum Gas must be stored under pressure in vessels designed to
withstand safely the vapor pressure at the maximum temperature. Construction of such
vessels must be to an acceptable design codes such as:
a) The American Society of Mechanical Engineers (ASME) boiler and Pressure Vessel
Code for unified pressure vessels. Code reference ASME.
b) The American Petroleum Institute Standard 2510 (2)
c) British Standard (BS) 1500 Part 1, fusion Welded Pressure Vessels for use in the
Chemical, Petroleum and Allied Industries or BS 1505.
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d) Nigerian Standards Organization approved standard on pressure vessels and
liquefied Petroleum Gas containers. NIS 220/85.
e) BS 5500 for new vessels design, construction, test and certification.
5.2 Storage Tanks Design Specifications and Fittings
Tanks for the storage of Liquefied Petroleum Gas shall be designed for a working
pressure corresponding to the vapor pressure at the highest temperature that the
tanks are likely to reach.
Each storage tank should be fitted with a pressure gauge and devices for
measuring the liquid content and its temperature. The maximum quantity of
Liquefied Petroleum Gas filled into anyone tank should be such that at the
maximum operating temperature it would not occupy more than 95% of the
capacity of the storage tank.
Excess flow valves should be fitted to prevent the loss of Liquefied Petroleum
Gases from storage tanks and transport tanks, and especially to protect points
where flexible hoses are used.
Remote controlled hydraulically operated shut-off valves should be fitted to each
storage tank.
5.3 Tank Location & Safety Distances
5.3.1 Location and Spacing
The distance given in Tables 1,2, and 3 below indicate the minimum approved distances
from above- ground/underground tanks and refer to the horizontal distances between
the nearest point on the storage tank and a specified feature, e.g. an adjacent storage
tank, building or boundary.
The distances apply to both spherical and cylindrical tanks.
5.3.2 BUNDS
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The provision of bund~, around LPG pressure storage tanks must be designed
and constructed in accordance code.
Separation kerbs of about one meter high should be provided to prevent spillage
reaching important areas, e.g. pipe track.
Pressure storage tanks for LPG be located within the bonded enclosures of Class'
A' or Class' B' product tankage or of low pressure refrigerated LPG tankage.
5.4 Container Filling Sheds
Filling Location pump manifold and with an acceptable design
Containers should be filled with LPG only in building designed for that purpose.
Filling buildings should be open-sided. The filling of containers should not be
done in cellars of upper storey of building.
Floor should be near ground level or raised to vehicle platform height.
A fence of at least 2 meters high should be provided to enclose the filling and
storage area if the filling is not carried out within a fenced area.
No duct, drain, or blow-off line should be directed into or discharged near sewer
systems or drains used for other purposes.
Water drains from the filling area should be provided with effective seals.
Piping should be protected by a casing.
Sufficient firefighting equipment should be provided at strategic places within the
premises and should have easy access.
Filling containers should not be stored in the container filling area.
(I) Adequate lighting should be provided to illuminate the working and storage
areas.
5.4.1 Filling System
Containers should be filled accurately and the quantity to be filled in any
container should not occupy more than 95% of the total capacity at a temperature
of 65 C.
The system should be designed in such a way as to minimize liquefied petroleum
Gas escape when the connection to the container valve is released.
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5.4.2 Portable Containers
Design and construction of Portable Containers should be designed, constructed and
tested in accordance with approval Nigerian Standard Organization specification for
LPG containers.
5.4.3 Storage of LPG Container
o The layout of the container store should be such as to facilitate quick
removal of containers in case of emergency.
o Containers should not be in proximity to corrosive or highly flammable
substances.
o Containers should be stored:
(i) Only in a place with adequate floor level ventilation and
5.4.4 Spacing For Bulk LPG Storage Tanks
Factors Approved Spacing
1. Between LPG high
Pressure
Storage Tanks
One quarter of the sum of the
diameter of the two adjacent tanks.
2. To Class ‘A’ or ‘B’ Product
Tanks.
15 meters from the top of bund
surrounding Class „A‟ or „B‟ Product
Tanks.
3. To building containing
flammable
materials, e.g. filling shed,
storage
15 meters
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building
4. To boundary or any Related on water capacity of tank on
the following
CUBIC METERS
DISTANCE
Up to 136 15
meters
Over 136 to 570Sq.m 25
meters
Over 570Sq.m 30
meters
FACTOR APPROVES SPACING
Between Refrigerated Tanks One half of the sum of the distances
of the two adjacent tanks.
To Class „A‟ or „B‟ Product Tanks One diameter of the largest
refrigerated storage tank but not
less than 30 meters
To Pressure Storage Tanks One diameter of the largest
refrigerated storage tank but not
less than 30 meters
To process unit, office building,
workshop, laboratory,
warehouse,
boundary or any fixed sources
of
ignition
5.5 bLocation and Spacing for Tanks for Industrial, Commercial, Domestic
Bulk Storage
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DISTANCE IN METRES
From Building or
Property Line
Between Tanks
Water
Capacity of
Individual
Storage
Above
Ground
Underground Above
Ground
Underground
1. Up to
500 Liters
None 3 None 2
2. Over 500
to 2,500
Liters
3 3 1 2
3. 2501 to
10,000
9 3 1 2
4. 10,001
to 150,000
18 3 2 2
(ii) At or above ground level, away from cellars, drains hollow etc. where vapor might
collect.
(d) Filling containers should not be exposed to excessive heat.
(e) Containers should be stacked in such a manner that they are at all times accessible
for inspection.
5.6 Pre -License Inspection
On completion of construction works, an inspection of the plant shall be carried out. The
following must be provided to facilitate licensing of the plant:
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Mechanical leak tester
Decanting System
Gas detector
Cylinder maintenance facilities
Adequate Fire Extinguishers
Safety Signs in the plant.
Personnel Protective Wears for the operators
Certification from weights and measures, Federal Ministry of Industries that the
measurement facilities calibration is satisfactory.
Certification from the Standards Organization of Nigeria (SON) that the pressure
(storage) tank meets specifications and is safe to be used for the proposed
purpose.
Final Fire Safety Certificate issued by Federal or State Fire Department.
Applicants are to note that failure to meet the above statutory requirements or any other
statutory requirements, which may come into force during the construction of the plant,
may lead to non-licensing of the facility for operation.
6.0 Manpower Requirement
For efficient operation of this venture, both skilled and unskilled personnel are required.
These consist of the production, administrative/account and marketing personnel.
About ten (13) personnel are required for the project to take-off.
Position Number of Persons Monthly Salary
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Managing Director 1 N 150,000
Marketing Manager 1 N 100,000
Plant Engineer 1 N 100,000
Plant Supervisor 1 N 80,000
Accountant 1 N 80,000
Dispatch supervisor 1 N 50,000
Operator Dispenser 3 N 90,000
Drivers 2 N 70,000
Office Assistant 1 N 30,000
Security 1 N 25,000
TOTAL 13 N 775,000
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Proposed Organogram
7.0 Critical Success Factor of the Business
The location of our business in Lagos state is very critical to the success of the business
because it would ensure easy access to the raw material. Easy access to the raw material
would ensure continuous production and at the best price possible.
Other critical success factor to consider are listed below
Access to capital: It is important to have access to capital to acquire, upgrade and
maintain equipment and facilities and keep afloat working capital. Also funds
must be available to meet contingent needs of the company.
Tenured Sales Contract: The Company shall endeavour to discover and secure
long term supply contracts with major Liquefied Petroleum Gas {LPG} buyers.
Managing Director
Procurement,
Production and
Quality Control
Manager
Factory Workers Mechanic
Store and front
desk officer
Sales and
Marketing Manager
Security Officer
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Professional Management of Project: The plant shall be managed by experienced
and technically competent professionals to ensure that the organisation‟s plan, as
well as targets can be realised in good time.
Organisational Structure: Controls must be put in place to avoid theft and
maintain product quality. A lean and entrepreneurial organization structure
ensures that the interest of staff and that of the owners are closely aligned.
Innovation: The Company needs to take into consideration customers‟ judgment
of their service. They must also be proactive in anticipating customer‟s future
demands and position themselves to meet such demands.
Product Quality Standardisation: This guarantees that at any time, the quality of
Liquefied Petroleum Gas {LPG} stored and sold will be maintained.
Trained Manpower: There must be continuous in-house and external training
suited to the needs of both the skilled and semi-skilled staff.
Identification and Management of Channels: Marketing through Channels and
distribution will be critical to the success of the marketing efforts.
Health, Safety & Environment: One of the important success factors will be the
strict adherence to health, safety and environmental issues in the running of the
plant.
Faster Turnaround Time: We will ensure that delivery time is adhered to and as
much as possible deliveries are made possible in advance of set dates
In order to ensure that we succeed in meeting the most critical requirement, the
following steps must be followed
Develop a business/market plan for our growth requirement
Share our plans and dreams as indicated and enumerated in our
business plan
Implement the plan properly as conceived, develop a strategy and
move from “Plan” to “Action” and mobilizing all stake holders in the
process
Review progress regularly with clearly defined milestones to measure
performance
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7.1 SWOT Analysis
This analysis evaluates the strengths, weaknesses, opportunities and threats associated
with the project.
Strength
There is a ready market for Liquefied Petroleum Gas {LPG} all year round
Availability of labour locally
The presence of the equipment suppliers and technical partners
Professional input through professional managers and Consultants
Central and accessible location
Weaknesses
Unavailability of raw materials
Availability of experts for plant maintenance
Lack of adherence to business plan recommendations
Opportunities
Proximity to the busiest markets
Competitive pricing
Government incentive supports agricultural business
There is a large demand for Liquefied Petroleum Gas {LPG}
Potential to create employment opportunities.
Possible business expansion into production and sales gas cylinders and other
accessories
Improving national economic environment.
High prospects due to continuing economic stability.
Threats
Availability of quality spare parts
Political instability in the years to come
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2 0
16
17,516,863.6
4
1,946,318.18 486,579.55 2,432,897.73 39,899,522.7
3
17
15,570,545.4
5
1,946,318.18 486,579.55 2,432,897.73 42,332,420.4
5
18
13,624,227.
27
1,946,318.18 486,579.55 2,432,897.73 44,765,318.1
8
19
11,677,909.0
9
1,946,318.18 486,579.55 2,432,897.73 47,198,215.91
20
9,731,590.91 1,946,318.18 486,579.55 2,432,897.73 49,631,113.6
4
21
7,785,272.73 1,946,318.18 486,579.55 2,432,897.73 52,064,011.3
6
22
5,838,954.5
5
1,946,318.18 486,579.55 2,432,897.73 54,496,909.0
9
23
3,892,636.3
6
1,946,318.18 486,579.55 2,432,897.73 56,929,806.8
2
24
1,946,318.18 1,946,318.18 486,579.55 2,432,897.73 59,362,704.5
5
GRA
ND
TOTA
L
42,819,000.
00
16,543,704.
55
59,362,704.5
5
8.3 Key Assumptions
Loan tenor is 24 months
Interest on loan is 25%
Loan is 70% of the project cost, equity is 30%
Income tax at 30% / annum
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Turnkey and Setup Service
Take advantage of our vast and extensive knowledge in the industry to assist you in
realizing your vision of building and managing this project. We offer to provide
Factory Designs, installations of Equipment‟s, Training, and product branding as
well as advisory Services for this project.
