MOBILE FUEL DISTRIBUTION

Introduction

Fuel is a commodity that is used by almost every household. The need to take services near to the people especially in rural and semi urban areas by selling fuel especially kerosene can be a good profitable venture as most people in rural areas buy fuel at relatively high prices. The business idea target is to reduce on the costs incurred by many middle men businesses in the rural and semi urban areas which are reflected in form of price, therefore, it will entail selling at relatively lower price. A quantity of 312,000ltrs of kerosene are estimated to be sold at a sales margin of 13% fetching a total revenue of $360 a year with operating costs of $278,969 annually.

Market Analysis

There exists a wide market in rural and semi urban areas of Uganda.

 

Investment Scale, Capital Requirements & Equipment.

The investment scale depends on the intended objectives of the entrepreneur. The capital requirements and equipment needed is as tabled below.

 

Capital Investment Requirements in dollars

Capital investment item

Units

Qty

unit cost

Total($)

Delivery Van (2.5-tones)

No

1

14,500

14,500

Fuel tank (1,500 ltrs)

No

1

3,000

3,000

Funnel

No

1

25

25

Furniture & Fixture

No

-

-

350

Total




17,875

 

Production and Operating Costs in dollars

 Direct materials, Supplies and Costs

Cost Item

Units

Unit cost

Qty/ day

Prod cost/day

Prod
cost/
month

Prod cost/
yr

Direct
Costs







Kerosene

Ltrs

0.83

1,000

830

21,580

258,960

Sub-total



1,000

830

21,580

258,960

General Costs (Overheads)







Distribution costs (Fuel)

820

9,840





Salaries &Wages

200

2,400





Repairs & Maintenance

75

900





Miscellaneous

100

1,200





Office rent

100

1,200





Depreciation

372

4,469





Sub-total

1,667

20,009





Total Operating Costs

23,247

278,969





1)   Production costs assumed 312 days per year with daily supply of 1,000litres of kerosene.

2)   Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.

3)   Direct costs include: materials, supplies and other costs that directly go into production of the product.

4)   Total monthly days assumed are 26 work days.

5)   The valuation currency used is United States Dollars.

Project Product Costs and Price Structure

Item

Qty/day

Qty/yr

Unit
Cost

Prod
cost/yr

Unit price

Total

Revenue

Fuel(Kerosene)

1000

312,000

0.89

278,969

1.03

321,360

 

Profitability Analysis Table

Profitability Item

Per Day

Per Month

Per Year

Revenue

1,030

26,780

321,360

Less: Production & Operating Costs

894

23,247

278,969

Profit

136

3,533

42,391