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A petrol station or gas station is a business establishment that sells refined petroleum products like fuel, lubricants, and cooking gas to customers. Depending on size and location, it can have an eatery, shop and a service bay for repairs and servicing of motor vehicles.

To start a petrol station business, like any other business in Kenya, you need to follow laid down guidelines to acquire the license and also, all other requirements as a business entity may be needed.

Below are the basic guidelines in place on how to go about starting a petrol station business in Kenya.

Have a Business Plan

A business plan validates your idea with action-based strategic plan on how to go executing the project from paper to ground; it highlights the potential difficulties, solutions and opportunities in the petrol business as envisioned by you as an entrepreneur.

The plan needs to outline the location, competition, traffic movement which create the main customer base of all products to be sold at the petrol station.

NB:  As much as competition is a disadvantage, sometimes it can help urge a business to do better and hence boosting efficiency and service delivery to the end consumers.

County Government Notification

The County government will evaluate your proposal for the petrol station by issuing construction approval from relevant authorities.

The processes of obtaining a petrol service station construction permit are:

• Apply for construction permit
• Obtain notification of inspection
• Have the premise inspection
• Obtain notice to collect licence
• Obtain the petrol service station construction licence

Energy and Petroleum Regulatory Authority Requirements

Requirements for licence for retail of petroleum products (except LPG):

1. Certificate of Incorporation / Business Registration Certificate

2. CR12 from the Registrar of companies (should not be older than 1 year at the time of submission of the application. Further, if a Limited company appears as part of the shareholders, provide the company’s CR12 plus all the Directors’ IDs)

3. Legible Copies of Identification Documents (IDs/Passports for all the directors)

4. Valid Work Permits Class “G” for all foreign directors working in Kenya (Foreign directors not resident in Kenya should provide a notarized declaration. Further, any employee given Powers of Attorney by a foreign director should provide a copy of their identification document)

5. Proof of land ownership (copy of title deed in the name of company/director(s)). In the case of long-term land lease, copy of duly registered lease agreement in the name of the Applicant company plus the title deed of the land owner

6. A valid Tax Compliance Certificate for the applicant from the Kenya Revenue Authority

7. A valid Single Business Permit for the premises of operation from the respective County Government

8. A valid Environmental Impact Assessment licence from NEMA for the facility

9. A valid Fire Clearance Certificate for the facility from the respective County Government

10. Certificate of Compliance with the Physical Planning Act 2019 (PPA5 or PPA2)

11. A valid certificate of registration of the facility as a work place from the Directorate of Occupational Safety and Health Services

12. A valid calibration certificate for each petroleum storage tank at the facility

13. A valid certificate of calibration of the petroleum dispensing units’ meters from the Department of Weights and Measures

14. A pressure test report for the petroleum tanks and pipelines at the facility

15. A colour photo of the facility clearly showing the frontage and the forecourt

16. A summary Emergency Response Plan from the applicant.

17. A permit to construct auxiliary lanes from relevant authorities like Kenya National Highways Authority (KeNHA) or Kenya Urban Roads Authority (KURA)

18. Permission to undertake construction from the County Physical Planning Office

19. Detailed construction architectural drawings of the petrol station design from certified engineers

NB: The review of application to construct a petrol station takes about 30 to 45 days before approval to begin construction. This process is done free of charge.

Obtain Insurance Cover

Insurance is very important in case a lethal crisis befalls your petrol station premises. One should choose a policy in which the risk of the policy occurring is potentially high as compared to other risk policies.

Fire cover is mandatory as well as an accident cover.

There is a total cover package called Petrol Station insurance/ forecourt insurance/ fuel station cover/ petroleum retail and convenience insurance/ filling station insurance. This covers all the risks associated with the petrol station be it fire, accidents, injuries while at the station, etc.

Construction

After getting the required certifications and approval to construct at the desired location, it’s time to get civil works started.

A standard petrol filling station will need storage tanks, digital dispensing pumps, wash and service bays, air and water dispensing fittings, lubrication equipment, and other motor vehicle mechanics related tools. The market rate for a 20,000 liters underground tanks varies between Kshs. 450,000 to Kshs. 900,000 per tank, as conforming to the minimum standards laid down by EPRA, add about Kshs. 20,000 for single piping, Kshs. 600,000 for double fuel dispensers with breakaway valve, or a Kshs. 350,000 for single pump dispenser, with all necessary piston meters and encoders to track fuel output (sales).

Take into consideration, pump installation may come as a separate expense of about Kshs. 10,000 per pump. So, to make a decision starting running a petrol dispensing business, one needs to have startup capital, of about Kshs. 3 million for sourcing oil products from oil marketing companies.

Do not forget the charges for a business licence of between Kshs. 10,000 to 50,000 depending on the county’s set trade laws, and Kshs. 5,000 for the fire permit.

Also, the pump attendants and other personnel who will be manning the station has to be taken into account with a minimum wage pegged at about Kshs. 15,000 per person. In total, the cost of starting a petrol station business in Kenya will set you back approximately between Kshs. 5M to 8M, inclusive of fueling station equipment and starting products, construction and all civil works, and labor. Depending on the size, which is essentially dictated by the number of underground tanks, dispensing pumps and the land costs, it may be lower or way higher than what’s projected here.

Conclusion

Petrol station business is a profitable venture with average to high profitability which sometimes can be impacted by fluctuating international prices, the degree of competition, strength of demand and the strength of trading international currencies.