MOHAMMED YUSUF GAS STATION

BUSINES PLAN for GAS STATION

By: MOHAMMED YUSUF

October, 2021

Assosa,Ethiopia
 Contents
Executive Summary ........................................................................................................................ 3
PROJECT DESCRIPTION ............................................................................................................. 4
Overview of the Petroleum Industry In Ethiopia ............................................................................ 4
Objectives of the Project ................................................................................................................. 5
Company’s Products ....................................................................................................................... 6
Location of Service Stations ........................................................................................................... 6
1.5 The significance of the project .................................................................................................. 7
Project design & Concept ............................................................................................................... 7
Environmental Sustainability ...................................................................................................... 7
Rain Water Collection................................................................................................................. 7
Architectonic composition .......................................................................................................... 8
PROGRAMS............................................................................................................................... 8
LAND USE: ................................................................................................................................ 8
The market Study .......................................................................................................................... 10
Market Analysis ........................................................................................................................ 10
The Demand-Supply Gap ......................................................................................................... 10
Target customers ....................................................................................................................... 11
Marketing promotion and strategy ............................................................................................ 11
Competition............................................................................................................................... 12
Project Implementation: ............................................................................................................ 12
Organizational Structure ............................................................................................................... 13
Organization and management ................................................................................................. 13
Man Power ................................................................................................................................ 13
Organizational Structure ........................................................................................................... 13
Financial Requirement and Analysis ............................................................................................ 13
Fixed investment ....................................................................................................................... 14
Working Capital ........................................................................................................................ 15
Pre-service expenses ................................................................................................................. 15
Sources of Fund ........................................................................................................................ 15
Financial analysis and Profitability........................................................................................... 15
. Environmental impact of the project (EIA) ................................................................................ 16
Positive impact of the project ................................................................................................... 16
Negative impact of the project .................................................................................................. 16
 Executive Summary

 Project name: Fuel station

 Project Type: fuel service
 Project Owner: Ato- Mohammed Yusuf Ali
 Project location: B/G region Assosa zone, Assosa town
 Project composition: fuel service, sell shop, car wash and cafeteria.
 Premises Required: -3000 m2
 Total investment Cost:- 4,600,000 ETB is required
 Employment opportunity: -11 individuals on permanent
 Social and Economic Benefit:-provide better fuel station service, employment
opportunities, generation of income and benefits for the local people
 PROJECT DESCRIPTION
Ethiopia has experienced a lot of growth over the past decade and a half both economically and in
demography. This pushes for more petrol station around the country coupled with the position that
Ethiopia has opened its gates to neighbourhood countries as well as very far countries. This growth
has consequently increased the number of investors and visitors. And the people of Assosa center
need a petrol station to stay close their business. This project aims at providing this target market
the requisite the facilities above mentioned for this described population and any person who
wishes to do a business in Ethiopia. Our mission is to successfully build, promote and provide
quality petrol station. We plan to create an environment of convenience that surpasses the standard
level for other petrol station in Assosa. The client of this petrol station development will have
every need met to ensure a total and comprehensive comfort.

Overview of the Petroleum Industry In Ethiopia

Ethiopia, at the moment, is a net importer of petroleum products. White and black petroleum
products are imported directly by the Ethiopian Petroleum Enterprise (EPE) through third party
suppliers. Upon receipt from third party suppliers, EPE stores the products at Horizon Terminal in
Djibouti and then distributes the different grades mainly Gasoline (Benzene), Gas Oil (Naphta),
Kerosene, Light fuel oil, Heavy fuel oil and Jet fuel to Oil Companies through a fixed margin
structure set by the government. In addition, EPE imports Gasoline (Benzene) from Sudan. For
the supply of Gasoline in Addis Ababa, EPE has made an agreement with Nile Petroleum, a
Sudanese Oil Company operating in Ethiopia, where the latter conducts blending of Gasoline with
Ethanol (E5) at its depot in Sululta and distributes E5 to Oil Companies.

Fuels pricing and revisions are made by the government on a monthly basis. Lubricants and
greases, however, are being directly imported by the Oil Companies with the intervention of
government in setting prices on a quarterly basis. The margin set by the Ethiopian government on
lubricants and greases is attractive as compared to the slim margin on fuel.

In the year 2008, the overall consumption of fuels in Ethiopia was over 2 billion liters. By the same
year, nationwide Lubricants and greases consumption was over 25 million litters. The consumption
of both fuels and lubricants is consistently increasing by 10% on a year on year basis and the trend
in growth is expected to continue in a similar pattern over the next years. Increased economic
activity coupled with increased government spending in the areas of infrastructure, power, mining
and other sectors continues to further expand the demand for petroleum products.

Despite persistent and increasing growth in the demand for petroleum products, the network
expansion (the number of outlets being built) and supply by existing Oil Companies is not
adequate. Recent trends in the exit of multinational Oil Companies is further weakening the
strength of the Oil Industry to service the growing demand of the nation for petroleum products.
In view of the current trends in economic growth and government’s plan to invest millions of
dollars in infrastructure, hydropower projects, mining and others sectors, the current gaps between
demand and supply in the petroleum sector is wide.

Ethiopia is also believed to hold a huge potential for energy and mining. The nation’s current
efforts in the areas of hydroelectric power projects and exploration of Oil and Gas are clear
testimonies of the government’s determination to unleash its natural resources.

In addition to the lucrative and stable Rate of Return on Investment (ROI) the petroleum
distribution business generates at the moment, strengthening capability of local Oil Companies in
the sector can serve as a stepping-stone to move into a highly profitable Gas and Oil Exploration
business with Ethiopian born prosperity and talent.

Objectives of the Project

 Implementing a cost-effective promotional strategy that will maximize awareness for the
quality of petrol station and facilities;
 Aiming at exceeding the customer's expectations;
 Providing High quality petrol station at minimized cost

Vision

To be the Most Preferred Oil Company in Assioa

Mission

To safely provide customers with quality fuels, lubricants and other related products through
convenient, efficient and exceptional services.
 Company’s Products
Mohanned yusuf Oil S.C. will adopt a phased approach in the scope of business activities it will
be engaged in. During the first two years of operation, the company will primarily focus on the
following products and services:
 Fuel products: Gasoline (Benzene), Gas Oil (Naphta) and Kerosene
 Lubricants and greases
 Other related products and services (non fuels related)

Location of Service Stations

Mohammed Yusuf fuel station will have its head office in Assosa. The company will also construct
its mini depot in the outskirt of Assosa during its first five years of operation. As aforementioned
on the introductory part the envisioned project is intended to be located in Assosa town at about
an elevation of 1570 meters. It has a latitude and longitude of 10°04′N 34°31′E, with this town is
served by an airport with a 6398 × 152 ft paved runway.
The town is selected because of geographical proximity of the town for future Ethiopian huge
renaissance dam located in the region. Assosa has had electrical power since the 1950s, as well as
telephone and post service by 1967. The town’s economic catchment extends beyond the woreda
attracting peasants from different neighbor woredas and kebeles The company has already
carefully identified strategic cities, towns and locations at which its service stations are going to
be enlarged. As a strategy, this company. Will focus to optimally invest in trade areas with
significant traffic flow and locations, which are convenient and accessible for motorists such as
Bambasi, Menge, Metekel and the like. In addition to the traditional channel of providing service
solely through service stations, the company will also introduce its unique channel to provide
service by getting much closer to end users.
 1.5 The significance of the project
The envisaged project deemed to add to the economic development of the nation in general and
zone and town in specific with following ways:

A. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income taxes,
payroll income tax and VAT are collected from undertaking business activities. Therefore, the
building will serve as sources of revenue for the town as well as for the region.

B. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self-employment or employment in other
organization. Hence, this project will hire 11 individuals and more than eighty individual during
construction.
Project design & Concept
Environmental Sustainability
The project provides for maximum green spaces around the buildings to provide cool
environment and therefore improving the air quality within the interior spaces of the buildings.
In terms of glazing choice it is recommended in the design to utilize low
emissivity. All the rooms cubicles shall be naturally ventilated hence no need to use the
mechanical ventilation.
The solar path will be taken into consideration at both planning and design stage of the
project by locating the large surfaces of glazing on the southern and northern sides, they shall
minimizing the need for the mechanical air conditioning within the rooms

Rain Water Collection

Another environmental sustainability measures that shall be undertaken in this development will
be storage and reuse of rain water collected from the building. This water shall be stored
underground in the storage tank provided on site and shall be used for general purposes such as
cleaning etc...
 Architectonic composition
The design being vertically oriented incorporates the use of horizontal elements to both contrasts
with the verticality and also to bring the whole composition to human scale.

The Balcons on the building façade shall also assist in sun shading to minimize heat gain and
therefore improving on human comfort.
Colour choice
Colour choice will mainly be determined by the existing buildings within the surrounding to ensure
that the proposed building integrates well with the environment.
A Working circulation for any car using the petrol station

PROGRAMS

LAND USE:
Fire fighting in case of the accident
In this project, no fire accident is likely to occur due to the fact that electricity distribution is well
designed and all the fuel pump will be on high quality.
In case of fire accident, there is provision of firefighting equipment (fire extinguishers, fire cabinet
etc). Fire alarm, Automatic fuses will be also provided and emergence exit are provided. The
extinguishers should be regularly inspected and maintained; the personnel of the building must be
trained on their use

Traffic control
In this project, no traffic jam is likely to occur due to the fact of entering and exit in petrol station
is well designed.

Likely Environmental Impact during Construction and Mitigation Measures

The project will not affect the environment. All soil which will be excavated, all waste which will
be generated to the site will be kept out the site in a public waste disposal. Recyclable materials
can be taken to disposal experts where they can recycle and be reused

Likely Environmental Impact after commissioning and Mitigation Measures

After commissioning, Solid waste from toilet can be used to produce Biogas. This energy can be
used to Cook, lighting,etc
 The market Study
Market Analysis
There are a number of factors which affects the demand of standardized fuel station. Of these
factors, the most important to have influence is population growth and the increased level of
income. The currently expanding gold mining processing in the town and around the town has
been inviting increase for the demand of vehicles in the town; in addition, the number of both
government and nongovernment offices has been increasing. Above all the increase in the number
of population of the town increases for the provision of different services. Nowadays, most of the
private business organizations need their own small-medium vehicles in order to give their services
and provide their products, and they prefer living in the place that found in the centre of the town.
As clearly indicated in the introductory part of this proposal, Assosa is in the dynamically growing
town of Assosa zone. Though the market demand gap for fuel station in Assosa is not clearly
understand there is wider gap for such demand as many merchants, organizations are flouring to
the town every day. From prior business experiences, the demand of fuel station in Assosa is very
high and hence the demand and the supply gap is very wide.

The Demand-Supply Gap

Assosa town is situated in very centre of Ethiopian gold mine production area which is highly
known for its mining content and special accumulation. Assosa town is also a major business
center and commercial route that attracts thousands of business travellers. These are also the
most important groups of potential customers that include both the local and foreign tourists
and the modern business community who choose services that range from economic to high
class standards. These groups would also choose a healthy comfortable climate that combines
a more traditional type with that of modern shops, cafeterias and fuel station. Even though
when compared with similar zonal towns in the region Assosa seems to have more developed
fuel station, the existing supply is far behind the growing demand for standard service. Hence,
the project will solve the serous demand problem in the town. Over the last decade, there has
been a significant growth in the number of local and international trades across the country.
This increase is mainly associated with the stimulation of economic activist and partly due to
an increase in the flow of international and local traders in to the town. Since Assosa is an
important commercial centre in addition there is a significant increase in business activates and
hence increasing the number of traders to the town. Even though there is a lack of quantitative
estimates, that number of traders to the town. Even though there is a lack of quantitative
estimates that depict the actual demand and also the annual growth rate Hotel facilities and
urban commercial facilities are scarce in the city. So far in the town there is no development
of such kind standard building and it is the first of its kind in the town and will promote other
investors from the town and the surrounding areas. They are mostly villa type premises
modified as show rooms and sailing posits. As a result there is a large gap between the
developed and that of the supply for modern bedrooms; Bank and cafeteria accommodation
hence this project would not face any problem of demand scarcity for it business centre and it
would provide good fuel service to customers.

Target customers
The target customers of this envisaged project include:-
1. Any vehicles of Business Community
2. Any vehicles of a nearby business organization
3. Any vehicles of government bureau
4. Vehicles Small accounts (SOHO) SME
5. Any vehicles of a Non-governmental organizations
6. Any vehicles of private owners etc…

Marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing strategies
for the project is consistently rendering quality service to its tenants. Due emphasis must be
placed on improving quality of service and facilities. The major marketing strategies to
promote the project and gain considerable market share include:

 advertising through different means focusing on the existing service and facilities
 Promote in association to the key location and nearby business
 Working on sustained promotional work.
 Working on public relations to reach and influence key personas and organization with
a capacity of making decision.
 Keeping the quality of its service/ facilities and consistently improving with changing
situations.
 Competition
There are different forms of competition that may face the envisaged fuel station service. These
are price and non-price based competition. Moreover, there are different competitors that will
compete with the project either directly or indirectly. But the fuel station under discussion has
diversified marketing strategies that could enable it come up with the different competitors in the
market. Moreover it will frequently conduct competitors research which focuses on, the strength
and the weaknesses, the different competitors’ strategies, the techniques they use in rendering the
service, their customer handling methods, and others. Generally the project has many other
projects all over Ethiopia which compete with it.

Project Implementation:
we anticipate that the project approval would take 20 days, following which time they would have
finished organizing financing. They plan to begin construction by June of 2022 and complete the
project on June 2023 (In 1 years). Construction will commence with establishment of a site
store/office after which a temporary fence will be erected, and after this, the demolition of the
existing houses will immediately take place. Once the site is thus secured the building levels shall
be established, the excavation for the construction of the basement floor will be done and the
retaining walls done to secure the basement & the ground floor. Then construction of structures
will begin from the foundation through the shell to the roof, and then followed by finishes, while
site works commence. This will be the boundary wall, parking, storm-water collection and water
and sewage disposal. On completion the project will be commissioned and a management unit will
then handle the operations of the development.
SN Activities Scheduled Date
1 Land request process October -november,2021

2 Land approval December,2021

3 Bank loan process January-March, 2022

4 Site development May,2022

5 Building and construction work June,2022-june,2023

6 Preparation for service June-July,2023

7 Service execution August, 2023

 Organizational Structure

Organization and management

The organizational structure should be in a way that the company be able to achieve its
objectives as well as the satisfaction of standard requirement. In addition to this, the structure
should fit the dynamics of all customers in the building ranging from small business to large
tenants.
Man Power
The total manpower required for the building will be 11 persons. The manpower list and the
corresponding labor cost are shown in part five of this document.
Organizational Structure
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
manager with the responsibility of supervising the overall activity of the building. Depending
up on the nature of the center and the amount of work to be performs; there exist auxiliary
units under the general manager. Employees under each unit will be supervised by the
department head that is accountable for the general manager.
General Manager is appointed by owner.

Owner

General
manager

HRM
and marketing technical
finance &maintenan
ce manager
cashier purchaser

Financial Requirement and Analysis

The financial resource is a prime resource for undertaking any activities. Hence for implementing
this fuel station a total of 4,600,000 ETB is required. From this 30% 1,380,000birr will be covered
by the promoter of the project while the rest 70% will be covered through loan from bank at the
prevailing interest rate. Therefore the said amount of finance is needed for undertaking the
following.
 Fixed investment
Table 1.1. land, building and construction

S.N Description of works Total cost in birr

1 Building construction 2,050,000.00
2 Site development 100,000
3 Design and supervision 50,000
total 2,200,000 birr

Machineries and equipment

Table1.2. Machineries and equipment

S.N Description measurement Qty. Unit cost in Total cost in
birr birr
1 Generator unit 1 46,000 46,000
2 Fuel dispenser machine unit 6 200,000 1,200,000
3 Electrician tools box set 1 12,500 12,500
4 Plumber tools box set 1 11,500 11,500
5 Fire unit 4 5000 20,000
extinguishers(security
equipment)
total 1,289,500

Table1.3. office equipment’s

S.N Description measurement Qty. Unit cost in Total cost in

birr birr
1 tables Unit 3 2000 6000
2 chairs Unit 6 600 3600
3 Computer set set 2 7000 14000
4 shelf Unit 2 3100 6200
5 Filling cabinets Unit 2 1500 3000
6 Managerial chairs Unit 2 2200 4400
7 Fax and telephone Unit 1 1300 1300
machine
8 Printer machine Unit 2 6000 12000
9 Carpet and curtain LS 9000
Total 59,500 birr
 Working Capital

Pre-service expenses
Table1.6 Pre-service expenses

SN Descriptions Cost in birr

1 Project proposal 10,000.00
2 Licensing fee and others
total 10,000.00

Sources of Fund
The source of fund to finance the project is planned to be from two sources. These are promoter’s
equity and bank loan. The loan is expected to be obtained from one of the local lending institutions.
Since the project is expected to take some times to repay all its debts the bank loan is assumed to
obtain on long term credit basis. Taking the financial position of the promoters into account, equity
contribution to finance the total investment out lays of the project is assumed to be fully covered
by the owner himself.

Financial analysis and Profitability

According to the projected income statement, the building will start generating profit in the 2nd
year of operation. Important ration such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment)show as
increasing trend during the lifetime of the project. The income statement and the other indicators
of profitability show that the project is viable.
 . Environmental impact of the project (EIA)
The EIA of the project activities was determined by identifying the environmental aspects and then
undertaking an environmental risk assessment to determine the significant environmental aspects.
The environmental impact assessment has included all phases of the project namely construction
phase and operational phase. The building has both positive and negative impact on the
surrounding environment.

Positive impact of the project

The positive impact of the project is:-

 Generation of employment opportunity

 Source income for the government through business income tax
 Income generation for the promoter
 Being exemplary for other investors who want to engage in the same business line.

Negative impact of the project

The project has the following negative impacts:

 Noise and Dust emission during Construction

There are some noises during the construction due to the construction operation and the
company will use to construct the construction during the day time. Again there is the emission
of dust which will be mitigated by sprinkling water on the service.

 problem on workers on construction

During construction there are some problems that will materialize on workers.

These are: damage on operation by using machines, construction materials and others. To mitigate
such impact the company will provide safety insurance and safety equipment.

 Swages during operation

During operation there are some wastes emitting from the mixed use building. These are wastes
from the latrine and will be mitigated by using modern waste treatment technology.