Just like any other enterprise, the petrol station business in Kenya needs flexible and good planning to set yourself on the path to success as an entrepreneur.
According to businessman Jacob Simiyu of Jadedo Investments, which vends fuel along Eldoret – Iten Road at Sinai, proper organizational skills are essential for the long-term survival of the fuel business.
Here is how to start a petrol station business in Kenya
1. Think out your petrol station business plan
As an aspiring business owner, having a detailed or well-written business plan will help you validate your idea as it communicates a strategic plan for your business by identifying potential problems and opportunities.
Simiyu says that a business plan is a critical modeling tool for any new business creation as it enables one to gain insights, especially as it projects possible competitors and analyzes the concepts of supply and demand.
“Before starting a petrol station business anywhere in Kenya, it is important to map out how your business will operate. You will know possible customers and the right location to put your facility. Ask yourself; are there big oil companies around where you want to set up your business? It will come in handy when tackling issues of competition. However, competition brings about the urge to do better in business, boosting its efficiency,” he stated.
He added that at this stage, an entrepreneur learns about the right location with a comprehensive trade network for the petrol station business. He hinted that the best location is along major highways, cities, and town suburbs because of affordable rent prices.
2. Notify the respective county government
When your business plan is ready and set to start the petrol station business in Kenya, visit the county government where the prospective fueling station sits to obtain construction approval from relevant authorities.
This process is absolutely free, and at the county government offices, you are supposed to check in with the fire department for business location risk assessment alongside the National Environment Management Authority of Kenya (NEMA) to obtain an Environmental Impact Assessment (EIA), which sifts the environmental impact of your project.
Requirements To Open A Petrol Station In Kenya
- Applicant’s 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 the County Physical Planning Office
- Detailed construction drawings of petrol station design from certified engineers
A review of your application to construct a petrol station in Kenya takes approximately 45 days or less, after which you may begin its construction.
3. Build your petrol station
After gathering the required certifications and receiving a go-ahead to start your petrol station in Kenya from the county government, it is time to zero in on its construction in the desired place with customer convenience.
A standard petrol filling station has storage tanks, digital dispensing pumps, wash and service bays, air and water dispensing fittings, lubrication equipment, and other mechanic vices. All of these are expensive to acquire.
For instance, according to petrol vendor, it costs between Ksh300,000 to Ksh700,000 to put up 20,000-litre underground storage tanks that conform with minimum standards set by EPRA, Ksh20,000 for single piping, Ksh580,000 to purchase double fuel dispensers with breakaway valve or a price of Ksh320,000 for single fuel dispenser, all with piston meters and encoders to track fuel output.
Also, petrol business hopefuls have to pay around Ksh5,000 to Ksh10,000 for fuel pump installation costs. With a viable startup capital, building a petrol station takes approximately one month before becoming fully operational.
Capital investments should also include around Ksh3 million for sourcing petroleum from oil marketing companies. One should also pay for a single business permit that goes for around Ksh10,000 to Ksh50,000, depending on the county’s set trade laws, and Ksh5,000 for a fire permit.
The average cost of starting a petrol station business in Kenya is approximately Ksh5 million to Ksh8 million, inclusive of fuelling station equipment, construction materials, and labor. However, this figure may be higher or lower depending on the size of the petrol station and whether the land on which it’s constructed is personal or leased.
Biggest Oil Marketing Companies in Kenya 2024
To determine the biggest Oil Marketing Companies (OMS) in Kenya, we used data from the Biannual Energy and Petroleum Statistics Report for the financial year 2023/2024, which provides information on the top companies that trade petroleum products; diesel, petrol, kerosene, and LPG in terms of market share.
Top 10 oil marketing companies in Kenya:
|Oil Marketing Company
|Vivo Energy Kenya Limited
|Total Energies Marketing Kenya PLC
|Rubies Energy Kenya PLC
|Ola Energy Kenya Limited
|Oryx Energies Kenya Limited
|Stabex International Limited
|Be Energy Limited
|Galana Oil Kenya Limited
|Lake Oil Limited
|Hass Petroleum Kenya Limited
Is the petrol station business profitable in Kenya? Yes, the fuel business can be very lucrative for risk-takers since it has high average profitability. However, the margin of profit can be impacted by fluctuating international prices, the degree of competition, and the strength of demand.