How to start a petrol station in Kenya, capital Required and profits

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Petrol Station is one of the most profitable businesses to start in Kenya. However, you need a lot of money to start one. The capital required for a single petrol station is between Ksh 10 million and Ksh 20 million depending on the size of the petrol station.

Documents and licenses required

Before thinking of how to start a petrol station, you should first know the licenses and documents required. Below is the list of documents required

  • Applicants’ company registration certificates for developing firms
  • Copies of applicants’ national ID
  • Proof of land ownership of legitimate lease agreement
  • Valid EIA license from environmental authority NEMA
  • Permit to construct auxiliary lanes from relevant authorities like Kenya National Highways Authority (KeNHA) or Kenya Urban Roads Authority (KURA)
  • Permission to undertake construction from County Physical Planning Office
  • Detailed construction drawings of petrol station design from certified engineers

In the process of getting approval, you will spend Ksh 150,000 to Ksh 250,000. The approval process takes 30 to 45 days.

Setting up a petrol station

You need to set it up in a strategic location where number of vehicles plying that road are many. It should also be near the road—not more than 50 metres from the main road.

Land and underground tanks are the most important things. You need at least half an acre of land where many vehicles can be parked. The petrol station should also be able to accommodate shops, car wash and other businesses for security purposes.

You need underground tanks, piping and fuel dispensers. You will also buy cabros and put up a wall

Piping—Ksh 100,000 to Ksh 200,000

Fuel dispensers—Ksh 1.5 million to Ksh 3 million

Perimeter Wall—Ksh 300,000 to Ksh 800,000

Underground storage tanks—-Ksh 1.5 million to Ksh 3 million

Cabro—Ksh 500,000

Other expenses—Ksh 1 million

Stock—Ksh 1.2 million to Ksh3 million

Petrol station profit in Kenya

You will be selling petrol, diesel and Kerosene. But most petrol stations sell petrol and diesel. EPRA determines the profit margins of the fuel being sold in Kenya. The profit per litre ranges between Ksh 5 and Ksh 7. If you sell 5,000 litres, you will earn Ksh 25,000 per day.

Majority of petrol stations in major cities sell 10,000 to 30,000 litres per day. This means that after all expenses, a petrol station will make net profit of Ksh10,000 to Ksh 30,000 daily. In Nairobi, a petrol station generates daily profits of Ksh 30,000 to Ksh 100,000. In a month, you will make Ksh 300,000 and above from a single petrol station.

Remember in a petrol station, you will be selling other things like engine oil, lubricants and LPG gas.

Challenges of petrol station business

A petrol station can easily catch fire. You have to insure your business against fire. Insurance costs will range between Ksh 300,000 and Ksh 500,000 per year.

Another challenge is theft. You must install CCTV and also hire security personnel to guard the business. You should employ people of highest integrity

Regular review of the prices is also another big challenge. The government can reduce the price of the fuel when the old stock is still available. This may lead to huge losses.

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