Profit Analysis of a 20 Metric Ton LPG (Cooking Gas) Plant in Ibadan, Oyo State, Nigeria

• 0 Comment(s)
• Author: Muyiwa Ige(LPG Stakeholder and Consultant)

Establishing a 20 Ton LPG(Cooking) Plant anywhere in Nigeria remains a wise investment decision, as a result of the impressive profit margin the business guarantees, if and only if, the basic conditions for the business to thrive, are put in place.

Supply of 20 Metric Tons of LPG to Ibadan, the capital of Oyo State

 Nearest LPG Depots

1.      Navgas LPG Depot , Apapa, Lagos

Price of 20 Metric Tons of LPG (as at 27/04/2020) – N2,850,000

OR

2.       PPMC LPG Depot , Badia, Lagos

Price of 20 Metric Tons of LPG (as at 27/04/2020) – N2,850,000

Landing Cost of 20 Metric Tons of LPG in Ibadan

§  Ex-depot Price of 20 Tons of LPG : N2,850,000

§  Cost of Renting a 20 Ton LPG Bridger (Tanker) from Lagos to Ibadan : N200,000

§  Union Fees and Miscellaneous – N40,000    

Total Landing Cost of 20 Tons of LPG in Ibadan – N3,090,000

 

v  20 Metric Tons of LPG = 20,000kg = 1600 Bottles of 12.5kg

So in essence, we have exactly 1600 bottles of 12.5kg in a 20 Metric Ton supply.

Therefore the landing cost of 12.5kg of gas in an LPG (Cooking Gas) Plant in Ibadan =N3,090,000/1600 = N1931.25

·         Now, per every 20 Metric of LPG stock received, approximately 60 bottles of 12.5kg of gas (amounting to 750kg) will be lost due to the following reasons.

      Venting of LPG cylinders during the refilling of gas

      Overfilling of LPG Cylinders

      Loss/non-recovery of LPG vapor in the supply tanker since most LPG Plants do not have LPG Compressors that recover vapor from the supply tanker. Gas plants that have LPG Compressors may not lose more than 10 bottles of 12.5kg of gas

      Possible leakage from valves, hose, welded points, pressure relief valve, strainer, pump etc..

 

·         The loss of 60 bottles of 12.5kg out of 1600 bottles( 20 Metric Tons) is calculated thus:

v  1600-60(bottles of 12.5kg) = 1540 bottles

Therefore, 1540 bottles of 12.5kg of gas will be used for the profit calculation.

·        Revenue for 20 Metric Tons LPG Plant in Ibadan

P.S: The retail prices (for home and other LPG users) and bulk sales prices(for LPG Retailers/resellers) used in this analysis are for locations where the LPG market is very competitive. For less competitive locations, the prices can be adjusted upward ,which implies that the profit margin will also increase correspondingly.

 

      Recall that the landing cost of 12.5kg of gas at an LPG Plant in Ibadan =N1931.25

      The average retail(home and end user) price of 12.5kg of gas at an LPG Plant in Ibadan = N2610

      The average bulk(retailer/reseller) price of 12.5kg of gas at an LPG Plant in Ibadan = N2150

      Now, a typical Cooking Gas Plant will sell 2/3 of its 20 Metric Ton stock to LPG Retailers(resellers)

Therefore : 2/3x1540 = 1026.6 ~1027 Bottles

 

v  Total number of 12.5kg bottles sold to LPG Retailers/Resellers =1027 Bottles

v  Total number of 12.5kg bottles sold to home and end users of LPG(Retail) =1540-1027= 513 Bottles

v  Total Amount realized from sales to LPG Retailers/Resellers = 1027 x N2150 = N2,208,050

v  Total Amount realized from sales to home and end users(Retail) = 513 x N2610 = N1,338,930

Ø  Total amount realized from sales to LPG Retailers/Resellers and home/end users of LPG = N2,208,050 + N1,338,930 = N3,546,980

 

v  Total Revenue for 20 Metric Tons of LPG: Total Amount realized – Landing cost of 20 Tons = N3,546,980 – N3,090,000 = N456,980

 

v  Now, the average estimated time for an LPG Plant with a modest turnover to exhaust a 20 Metric Ton stock is three days.

 

v  Total Revenue for one week = N456,980 x 2 = N913,960

 

v Total Revenue for one month = N913,960 X 4 = N3,655,840

 

P.S : Some LPG Plants with a high turnover exhaust up to 40 Tons + of LPG in a day.

Monthly Operating costs

Personnel Salaries (3 Gas Attendants, 1 Manager and 2 security Men) – N210,000

Power Bills/ Fuel for Generator – N70,000

Government Dues – N15,000

Maintenance Cost – N65,000

Stationeries, kits and miscellaneous – N50,000

Total Monthly Operating Costs – N410,000

Total Monthly Profit for an LPG Plant in Ibadan

Total Profit per Month = Total monthly Revenue – Monthly Operating costs = N3,655,840 – N410,000 = N3,245,840