When I was a kid, I was told that the source of energy was firewood. We used it to cook and do everything.
By the time we got used to firewood, the government announced that gas was now _the_ clean source of cooking energy.
It was a bit tough for many Tanzanians to embrace this new source of cooking energy.
Quite a number of people in Tanzania feared that LPG was highly explosive and could endanger their home. Also, it was seen as a luxury reserved for the rich.
The awareness of the social benefits of using LPG was low among the beneficiaries. So, the annual consumption of LP gas in Tanzania was only 5,500MT in 2005.
Entering into the LPG business in Tanzania at those times was unprofitable because the market demand for cooking with LP gas was too small and Tanzanians were unwilling to pay for it.
With regular awareness campaigns now, there has been a steady increase in the number of households using LPG. Today, most people in Tanzania are aware of the LPG as a clean and healthy source of domestic cooking energy, and they are moving away from charcoal and firewood.
The annual LP gas consumption in Tanzania has grown from 5,500 metric tonnes in 2005 to 145,800 metric tonnes in 2019.
With this steady upward movement of LPG consumption in Tanzania, investing in the LPG business can be one of the best business ideas to pursue in Tanzania right now. Why? Because the LPG has become a constant domestic requirement for households (families), lodges, restaurants, schools, colleges, hotels and industries.
Five LPG Business Opportunities in Tanzania
There are several opportunities across the LP cooking gas downstream industry in Tanzania.
1. LPG Bulk Terminal Storage: This is a lucrative investment opportunity in Tanzania’s LPG value chain. This kind of investment has a multiple source of income. As a large LP Gas marketer, you import, store and sell LP Gas to super dealers, gas refilling station owners, and you can also sell in bulk to commercial customers like hotel, lodges, schools and colleges. Furthermore, you can earn additional income by offering installation service of bulk tanks and pipeline networks to schools and hotels who need to use LP Gas for cooking.
The initial capital requirement for this storage terminal is huge: it will require not less than TZS 1.5 billion. However, the business is more profitable as you’d sell the LPG in bulk.
2. LPG Re-filling Plant/Center: I’d recommend this to anyone with financial muscle. As a refilling center, you will purchase bulk LP Gas and sell to distributors and consumers. It’s capital intensive and the total project cost for setting up a refilling center in Tanzania is TZS 250 million to TZS 300 million.
3. Establishment of Gas Cylinder Manufacturing Plant: It will interest you to know that Tanzania imports the LP Gas cylinders from India. So, there is no functional LP Gas cylinder manufacturing facility in Tanzania, and this presents immense opportunities for aspiring entrepreneurs with sizable amount of capital to set up a gas cylinder manufacturing plants in Tanzania.
4. Start a Profitable LP Cooking Gas Retail Shop: The LP Gas retail shop is popularly known as LP Gas dealer or LP Gas reseller. As you walk along in the streets of Tanzania, you will notice that there are retail shops at every corner. It is cheap to start this business. You need TZS 2 million to TZS 6 million to start an LP Gas retail shop in Tanzania. The key factors to success in this business are location and your marketing skills. A prime location is a key determinant to the success of an LPG retail shop. Excellent customer services, word-of-mouth marketing and free delivery are crucial to success in this business.
5. LP Gas Distribution and Logistics: Opportunities in the segment is to involve in distributing of the LPG and its cylinders through tank trucks to different LPG gas dealers and LPG refilling centers in Tanzania.
To get involved in this business, you have to get the finance needed, pick a strategic location and get an approval from EWURA. The LP Gas business is lucrative in Tanzania and it needs a lot of strategic planning to start.
_Tanzania Petroleum_ can help with that. We offer strategic planning,, business plan preparation services tailored specifically to the success of your oil and gas business. *Click here to learn more.*