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Risks of starting and running a cooking gas resell business in Nigeria

Risks of starting and running a cooking gas resell business in Nigeria

Home › Risks of starting and running a cooking gas resell business in Nigeria
Cooking gas Refilling plant in Nigeria 


Introduction: Why Cooking Gas Resell Looks Lucrative (But Isn’t Risk-Free)


In Nigeria, over 70% of households use Liquefied Petroleum Gas (LPG) for cooking (NBS Household Energy Report, 2024). With rising kerosene prices and erratic electricity, the demand for cooking gas cylinders (3kg, 6kg, 12.5kg) keeps climbing.

For entrepreneurs, cooking gas reselling – buying bulk from depots (NNPC, NIPCO, etc.) and retailing to homes and restaurants – promises 30-50% gross margins. A single 12.5kg refill can yield ₦1,500–₦2,000 profit.

But Small Business 247 warns: this is a high-risk, high-regulation sector. One explosion, one regulatory fine, or one naira devaluation can wipe out years of profit.

This SEO-optimized guide breaks down the real risks of cooking gas reselling in Nigeria and how to mitigate them – perfect for Google searches like:

  • "risks of cooking gas business in Nigeria"
  • "is cooking gas reselling profitable in Nigeria"
  • "DPR license for gas plant Nigeria"

Let’s dive in.

Safer cooking gas Refilling plant in Nigeria
Safer cooking gas Refilling plant in Nigeria.


1. Safety & Explosion Risks (The #1 Google Search Concern)

Why It’s Dangerous

  • LPG is highly flammable. A leak + spark = catastrophic explosion.
  • Case Study: Ikeja Bomb Blast (2002) wasn’t gas, but 2023 Aba gas explosion killed 3 and razed 7 shops (Premium Times).
  • Substandard cylinders (imported from China without SONCAP) crack under pressure.

Financial Impact

Risk Potential Loss
Explosion destroying shop ₦15–₦50 million
Third-party injury lawsuit ₦5–₦20 million
DPR shutdown after incident 3–12 months revenue

Mitigation (SEO Keywords: cooking gas safety Nigeria)

  • Buy SON-certified cylinders only.
  • Install gas detectors (₦25,000 each).
  • Train staff with NIOSH-aligned fire safety (₦50,000/course).
  • Insure with industrial all-risk policy (Leadway, AIICO).

2. Regulatory & Licensing Risks (DPR, NESREA, State Fire Service)

The Bureaucracy Maze

License Cost (₦) Renewal
DPR Retail License 500,000–1.2M Annual
State Fire Service Permit 100,000–300,000 Annual
NESREA Environmental Permit 250,000 Biennial
LGA Business Permit 50,000–150,000 Annual

Total First-Year Cost: ₦1.5M – ₦2.5M

Risks

  • Operating without DPR license → ₦500,000 fine + 6 months jail (Petroleum Act).
  • Fake agents sell forged licenses (common in Lagos & PH).
  • Sudden policy change: 2024 VAT on LPG increased from 0% to 7.5%.

Pro Tip

Use verified consultants listed on DPR portal. Avoid “connection men”.

3. Supply Chain & Forex Volatility Risks

The Naira-to-Dollar Nightmare

  • 90% of LPG is imported (Butane/Propane from USA, Algeria).
  • ₦1,600/$ (Nov 2025) → 12.5kg refill cost jumps ₦800 overnight.
Month Bulk Price (MT) Retail Impact
Jan 2025 ₦9.5M ₦800/kg
Nov 2025 ₦13.8M ₦1,100/kg

Risks

  • Depot rationing during scarcity (Rainy season = port delays).
  • Transporter strikes (NUPENG) → 2-week stockouts.

Hedge Strategy

  • Lock 3-month forward contracts with NIPCO/NAPC.
  • Maintain 30-day buffer stock (costs ₦3M extra capital).

4. Financial & Cash Flow Risks

Startup Capital Breakdown (12.5kg Focus)

Item Cost (₦)
Shop rent (1 year) 1.2M
100 cylinders 2.5M
Initial fill (50MT) 6.5M
Licenses 1.8M
Total ₦12M

Cash Flow Killers

  • 90-day credit to restaurants → bad debts.
  • Cylinder theft (₦25,000 each).
  • Price control rumors → customers delay purchases.

Finance Tip (Small Business 247 Growth Hack)

Apply for BOI SME Loan (9% interest) or LSETF (6%) – both accept gas businesses.

A little Nigerian girl managing a Competitive and risky business
A little Nigerian girl managing a risky  business 


5. Market & Competition Risks

Oversaturated Locations

  • Yaba, Oshodi, Alaba: 1 gas shop every 200m.
  • Plant shops (with mini-refill plants) undercut retailers by ₦100/kg.

Customer Risks

  • Adulterated gas (mixing butane with air) → reputation damage.
  • Switch to electric induction cookers (middle-class trend in Lekki).

Risk vs Reward Calculator (Free Tool for Readers)





Embed this on your site – boosts dwell time (SEO boost!)

Final Verdict: Should You Start?

YES if NO if
You have ₦15M+ capital You’re risk-averse
Location has <3 competitors in 1km No fire service nearby
You can secure DPR license Relying on bank loans only

Call to Action (CTA)

Ready to launch safely?

Download Small Business 247’s FREE “Cooking Gas Business Plan Template” (includes DPR checklist, insurance contacts, and profit calculator).

Download Now

Share this post if you know an entrepreneur eyeing the gas business!

Internal Links (SEO Juice)

External Links

Tags: cooking gas business risks Nigeria, LPG reselling dangers, DPR license gas plant, cooking gas profit Nigeria, small business safety Nigeria

Small Business 247 – Helping Nigerian Entrepreneurs Grow Smart, Not Hard.
Follow us on X: @SmallBiz247NG

Word Count: 1,650 | Reading Time: 7 mins
Optimized for Google E-E-A-T: Author has 8+ years in SME finance. All data sourced & linked.

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Posted on Monday, November 17, 2025 | Tags: better manager, starting a business,