CNG Filling Station Business Plan Example for Investors in Nigeria
This is a business plan example for a mini CNG filling station based in Nigeria.
The demand for CNG as gas for vehicles in Nigeria is increasing, as the cost and availability of fuel is becoming a growing concern.
The government, through its agencies, is now advocating for motorists to consider CNG retrofitting as a long-term alternative to gasoline.
This business plan example demonstrates the opportunities in this emerging sector in order to guide investors and business enthusiasts in starting their own CNG stations.
The names and details in this content are fictitious and are used only for illustrations. If you're looking to go into this business, you can edit some of the details to fit your requirements.
Executive Summary
Gortex Energy is proposing an innovative approach to democratizing the use of CNG fuel for transportation in Nigeria.
We are proposing to build at least 100 CNG retrofitting hubs across Nigeria, with franchises available to supplement our hubs.
We are competing with Xotos Care, among other industry players, but we are banking on the strength of our team, brand, and partnerships, to create distributed access to CNG products and services in Nigeria like never before.
We are expecting to earn a yearly profit of 407 million Naira at a 51.7% margin.
Business Description
Gortex Energy is a mini CNG refill station based in Kaduna, Nigeria.
We specialize in the design of high-pressure CNG valve systems and the convenient delivery of CNG cylinders to motorists across Nigeria.
We want to democratize the adoption of CNG fuel by creating access via swap clusters in strategic locations in Nigeria.
Business Model
We intend to solve a unique problem in the transportation sector, which has been a prevailing problem since the federal government laid the foundation for CNG adoption through the National Gas Policy.
There seems to be a misunderstanding on the part of motorists on how CNG can be a more beneficial long-term solution than gasoline, and for those who are already convinced on switching to CNG, access has also been a problem.
We are looking to create CNG stations for educating motorists and providing them with the necessary services for CNG retrofitting.
Here are the different aspects of our business model:
- Retrofitting of vehicles
- Sale & distribution of conversion kits
- Fees from cylinder swaps
- Commissions from franchise centers
Product Pricing
Our products and services are priced moderately so as to create a cycle of repeat customers in order to aim for profitability.
Here are our proposed prices:
- Retrofitting of Vehicles: 65,000 Naira
- CNG conversion kit: 35,000 Naira
- Cylinder swap fee: 2,000 Naira
- Franchise Commission: 50,000 monthly
Industry Background
While compressed natural gas (CNG) has its application in many industries, its use as an alternative fuel in the transportation industry in terms of cost and effect on global warming, is considered a game changer.
In Nigeria, motorists have been plagued with an energy problem where gasoline is not only expensive, but difficult to get.
These problems have ensured that the cost of transporting goods and services has continued to increase over the years, thereby contributing to the biting inflation.
With the unveiling of the National Gas Policy document by the government, there's been a rapid rise in the demand for CNG retrofitting of vehicles, as the government has taken the first step in launching a few centers for free CNG conversion for commercial vehicles across the country.
Competitive Analysis
The industry for CNG retrofitting is still relatively new and quite fragmented, so there's yet to be any concrete competition.
However, a few vehicle servicing centers are already offering CNG retrofitting to their customers, and they are getting good patronage, as their customer base is mostly upper class.
We have identified a top vehicle servicing brand, Xotos Care, which offers CNG retrofitting and sales, and has service centers in Lagos, Abuja and Port Harcourt.
Competitor SWOT
Strengths
The majority of our competitors are vehicle service workshops that already have existing customers that trust them.
They could easily upsell their customers on the need to convert their vehicles to CNG.
Weaknesses
Many of the vehicle service stations are able to offer only vehicle servicing but will find it difficult to pivot into sales of CNG products.
Opportunities
These service stations could build partnerships with CNG stations to complement their services and better serve customers.
In fact, a few CNG filling stations already have mechanics on ground to provide allied services to this effect.
Threats
Many mechanic workshops are now looking to offer CNG retrofitting services, which may commonize the service and crash prices.
Market Analysis
Target Market
We are targeting commercial vehicles (cars, buses, and trucks) in Nigeria who are looking to convert from gasoline to CNG.
According to the National Bureau for Statistics, there are over six million commercial vehicles in Nigeria.
With less than 1% of these commercial vehicles being powered by CNG, and the federal government projecting the market to be worth $10 billion by the year 2030, there's huge potentially for growth and profit.
Expected Annual Customers
We expect to have 100 CNG stations across the country, with each station serving at least 20 customers per year.
That makes our total expected annual customers about 2,000 commercial vehicles per year.
Marketing Plan
Our marketing plan involves creating CNG conversion hubs across the country by partnering with filling stations and mechanic workshops in strategic places around the country.
This would help us to be competitive and able to reach customers who might need our products and inclusive services going forward.
SWOT Analysis
Strengths
We are leveraging our brand, team strength, and reach to create access to CNG products and services, like never before.
With more than 100 CNG stations across the country, we are able to sufficiently compete and pivot our products and services to meet customers’ demands.
Weaknesses
We are relatively new and pivoting our offerings according to market response. This could be an opportunity for the competition to quickly capture more segments of the market.
Opportunities
The market is not yet saturated, with customers curious about how CNG could be a game changer for their transportation business.
Hence, they are more willing to try out new products and services, which could be an opportunity for high volume of sales.
Threats
The industry is not yet mature, and CNG retrofitting might not become mainstream in the long-term.
Hence, there is a risk of incurring losses in the form of capital assets invested in setting up our CNG hubs.
The Team
At Gortex Energy, we have a dynamic team of experts that cut across different industries, and with vast experiences.
Here are some key members of our team:
Solomon Kii is a former Software Procurement Manager at Transcorp PLC. He brings his vast industry experience to serve as the Hubs Coordinator at Gortex Energy.
Dan Laddi is known as a veteran in heading negotiations for many government projects in Nigeria. He serves as the Head of Partnerships at Gortex Energy.
Bridge Paragon has served in various technical capacities for several global tech companies, such as zestsoft corp. He is currently the CTO at Gortex Energy.
Emm Goddy is the brainchild behind Gortex Energy and currently the CEO. He’s started and exited several tech companies, most recently exiting Crest Informatiks LLC at a $6 million direct sale.
Financial Plan & Forecasts
Expected Annual Revenue
Retrofitting of Vehicles:
1,000 vehicles at 65,000 Naira = 650,000,000 Naira
CNG conversion kit:
3,000 kits at 35,000 Naira = 105,000,000 Naira
Cylinder swap fee:
10,000 cylinders at 2,000 Naira = 2,000,000 Naira
Franchise Commission:
50 franchises at 600,000 Naira = 30,000,000 Naira
Total Revenue:
787,000,000 Naira
Production & Distribution Cost
Cost of Cylinders:
2,000 cylinders at 120,000 Naira = 240,000,000 Naira
Cost of Equipment:
100 hubs at 200,000 Naira = 20,000,000 Naira
Rent:
100 hubs at 1 million Naira = 100,000,000 Naira
Utilities:
100 hubs at 200,000 Naira = 20,000,000 Naira
Total costs:
380,000,000 Naira
Profit Margin
(Total Revenue - Total Costs) / Total Revenue X 100
Profit = 787 million Naira - 380 million Naira = 407 million Naira
407 million / 787 million X 100 = 51.7%
The expected profit margin is 51.7%
Related Posts:
Nonprofit Business Plan Example for NGOs in Nigeria
eCommerce Business Plan Example for Startups in Nigeria
Real Estate Business Plan Example for Developers in Nigeria
Restaurant Business Plan Example for Restaurants in Nigeria