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The demand for cooking gas in Nigeria and across Africa is expected to rise by over 125% in the next five years. There are many opportunities along the LPG value chain, from production to retail - though each stage has different investment and regulatory requirements.
The domestic liquefied petroleum gas (LPG) sector in Nigeria oil and gas industry has huge investment potential. Most people in the middle and upper classes now use gas for cooking. It’s also in high demand across industries, government offices, hotels, hospitals, restaurants, bakeries, and other businesses. In addition, LPG is now seen as a safe, clean, and environmentally friendly fuel option, which supports the global move toward green energy.
The demand for LPG is increasing across Nigeria in recent months. According to energy analysts, usage is expected to grow by over 125% in the next five years. In Nigeria, the National Bureau of Statistics (NBS) reports that the average refill price for a 12.5kg cylinder is around ₦17,492.42, or ₦1,399 per kg, showing steady growth in consumption despite price fluctuations.
Why Start NOW?
Starting from the downstream (retail) end of the business is often easier and faster than investing in upstream operations like production. To begin, every investor must register their business with the Corporate Affairs Commission (CAC), which oversees the formation and regulation of companies in Nigeria.
This high demand means there is room for new investors to join the market, especially in places where gas plants and refilling stations are still limited.
The Nigerian government has also deregulated the LPG sector, making it easier for private individuals and companies to build and operate gas plants. The Department of Petroleum Resources (DPR) provides clear licensing steps, while the Corporate Affairs Commission (CAC) handles company registration. This open market system encourages private investment and competition.
Example of Profit from LPG Chain
Here’s a simple example of how profits flow across the LPG value chain:
• Retail price: ₦17,492.42 per 12.5kg cylinder (₦1,399/kg).
• Upstream (refinery/supply): ₦15,495.45
• Operational cost: - (it depends)
• Retail margin (profit): 10% or more
From this breakdown, investors with LPG gas plant can quickly recover their investment and start earning steady income. Those investing upstream (refineries or bulk terminals) can make higher long-term profits but need larger capital
Although the cooking gas business is becoming more common, the number of properly built LPG plants remains small. This creates huge potential for new investors. As more households switch to gas, the customer base continues to expand, ensuring steady demand.
Building an LPG plant can take up to a month or more, depending on how quickly the Department of Petroleum Resources (DPR) approves your licenses.
However, with the help of NaijaLPG, this process becomes much easier. Our team understands the DPR process and has good working relationships with their officials. We help you secure all required documents without stress or unnecessary expenses.
NaijaLPG has extensive experience in LPG implementation and can assist you in obtaining licenses and approvals from the DPR and other regulatory bodies. After getting your papers, we’ll guide you on the next steps to take. We never leave our clients stranded, our strong reputation in the gas industry speaks for itself.