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Investing in oxygen gas production is lucrative

By Godwin Uba
11 January 2022   |   3:39 am
The impact of COVID-19 pandemic and ensuing restrictions and toll on the economy have changed the nature and types of investments to embark on. One of the businesses to go into in this period is oxygen gas production.


The impact of COVID-19 pandemic and ensuing restrictions and toll on the economy have changed the nature and types of investments to embark on.
One of the businesses to go into in this period is oxygen gas production. It is a venture that produces gaseous oxygen for medical and industrial uses. The product is used in hospitals, chemical processing firms, general engineering, steel manufacturing, vulcanizing and welding industries. The market is huge and keeps on expanding.

Apart from occasional demand for oxygen by some firms, the product is a must-use in three key sectors; healthcare, shipping, steel and metallurgy.
With the rise in cases of respiratory diseases, as witnessed in the Corona Virus pandemic, where many of the hospitals cannot meet up with demand, setting up oxygen gas producing firm becomes an essential venture.

With initial capital outlay of N50 million, the project is on the go. One good thing about the project of this size is that it can be kick-started with 50 per cent debt financing and 50 per cent equity.

An investor could start with 2,160,000m3 capacity per year and gradually increase the unit as the market expands. This product also has some export potentials, as findings show that companies from Niger Republic, Ghana and Togo, as well as other West and Central African sub-regional markets come to Nigeria to buy oxygen gas and retail it in their countries. Keying to this would make any investor to earn foreign currency.

It is important to note that the few companies producing oxygen gas in the country cannot meet local demand. This can be confirmed with the recent pronouncement by the Lagos State Governor, Babajide Sanwo-Olu, that demand for oxygen gas at one of its main hospitals has increased fivefold in recent weeks to 350, six-litre cylinders a day and that the demand is on the increase.

Findings show that at December 2020, Nigeria could not meet up with increased demand for oxygen gas in its hospitals and health centres and that about 285.80 million tons valued at about N669.53 billion was needed.

According to the findings, the failure to meet demand led to price increase of the product in the country. And the cost of administering it to patients in some hospitals rose to N4,500 per hour for adults and N3,000 per hour for children.

Based on findings, within August 2020 and January 2021 the price of oxygen gas rose to N18, 000 and N20, 000 per cylinder, depending on the hospital.

From the survey, the supply position has not moved upwards at the rate demand has advanced, thereby creating a fertile ground for investors to come in.

Although the machinery are imported, the proceeds from the venture both in the short and long run is worth the capital invested.
For details on comprehensive and workable feasibility studies, business plan, procurement and installations of strong and durable machines, standard packaging methods, funding arrangements, recruitment and training of manpower contact the writer.

With estimated production cost of about N98.28million in the first year, the project is likely to yield a gross profit of N178.91million and may consequently increase to N538.29 million in the 5th year. This means within five years of operation, about 79 per cent yearly returns on investment may possibly be achieved.

From revelation so far, an investor is likely to rake in his/her initial capital outlay within one year and two months with the right workforce. The above result clearly shows the potential of the investment.

For details on comprehensive and workable feasibility studies, business plan, procurement and installations of strong and durable machines, standard packaging methods, funding arrangements, recruitment and training of manpower contact the writer.
• Uba is from Global Trust Consulting. Tel: 08034494437(WhatsApp), 08023664368. Email: ubagodwin@yahoo.com