PROJECT PROPOSAL ON THE ESTABLISHMENT OF FUEL STATION IN SHEGER CITY

FURI SUB-CITY

PROJECT PROPOSAL ON THE ES

Promoter:SHIMALIS BULTO DIDA

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PROJECT PROPOSAL ON THE ESTABLISHMENT OF FUEL STATION IN SHEGER CITY
FURI SUB-CITY

Table of Contents
1. INTRODUCTION.........................................................................................................................................5
1.1. Purpose of the Document........................................................................................................................7
1.2. Crucial Factors & Steps in Decision Making for Investment.................................................................7
2. Objectives of the project................................................................................................................................7
2.1. General Objectives...................................................................................................................................7
2.2. Specific Objective...................................................................................................................................8
2.3. Profile of the Promoter................................................................................................................................8
2.4. The Economic Significance of the Project..................................................................................................9
2.5. Location and Premises Required..............................................................................................................10
3. MARKET STUDY.......................................................................................................................................11
3.1. Scope of the Market Study....................................................................................................................11
3.2. Future Market Demand.........................................................................................................................11
3.3. Past Demand.........................................................................................................................................12
3.4. Forecasted Demand..............................................................................................................................12
3.5. Market Supply.......................................................................................................................................14
3.6. Target Customers..................................................................................................................................15
3.7. Market Prospects..................................................................................................................................15
3.8. Marketing Promotion and Strategy.......................................................................................................15
3.9. Service program....................................................................................................................................16
3.10. Sales Plan/Capacity..............................................................................................................................16
4. SERVICE MIX AND CIVIL WORK OF THE PROJECT.........................................................................16
4.1. Service Utility.......................................................................................................................................16
4.2. Civil Engineer Building and Civil Works.............................................................................................16
5. ORGANIZATION AND MANAGEMENT................................................................................................17
5.1. Organization and Management.............................................................................................................17
5.2. Man Power............................................................................................................................................17
5.3. Organizational Structure.......................................................................................................................17
6. FINANCIAL REQUIRMENT AND ANALYSIS.......................................................................................19
6.1. Total Initial Investment Cost................................................................................................................19
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6.2. Fixed Investment cost...........................................................................................................................20

6.3. Initial Working Capital.........................................................................................................................21
7. Financial Analysis and Statements...............................................................................................................23
7.2. Underlying Assumption............................................................................................................................23
7.3. Depreciation Schedule..............................................................................................................................24
7.4. Revenue Projection of the project.............................................................................................................25
7.5. Projected financial statement.................................................................................................................26
7.5.1. Profitability.........................................................................................................................................27
7.5.2. Break-Even Analysis..........................................................................................................................28
7.5.3. Pay-Back Period.................................................................................................................................28
8. ENVIRONMENTAL IMPACT OF THE PROJECT..................................................................................28

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PROJECT PROPOSAL ON THE ESTABLISHMENT OF FUEL STATION IN SHEGER CITY
FURI SUB-CITY

EXECUTIVE SUMMARY
1. Project Name Fuel Station Project

2. Project Owner Shimalis Bulto Dida

3. Nationality Ethiopian

4. Project location
Sheger city Furi sub-city Adminstration

5. Project Composition Fuel station service (Diesel, Gasoline, Kerosene, LBG

gases, Engine oils, Lubricant and Car wash service and
Mini- cafeteria)
6. Premises Required 5000m2

7. Total Investment Br. 40,000,000 of which 30% equivalent to 12 million

Cost
financed by the owners’ equity and the rest 70%
equivalent to 28,000,000million financed through bank
loan
8. Employment A total of 20 employees , 12 are permanent & the rest 8
Opportunity
are temporary and contractual employees
9. Benefits of the Provide better service, Revenue generation, Employment
project For The
Opportunity, benefits local economy and stimulate local
region/ country
economy.

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FURI SUB-CITY

1. INTRODUCTION

Due to increasing level of standard of living more Ethiopian are increasing

the number of cars on the road, the need for constant power supply to aid
uninterrupted production of goods and services and also for domestic use
more Ethiopians are increasing the demand for fuel in order to enjoy the
usage of their generating sets and industrial plants.
In the growing of service expanding in urban areas the nation since dynamic
economic development of urban economy requires the construction of these
Fuel station Plays a vital role in towns to support the growing of business
service sectors, the growth of the economy, the Fuel station in the one
becoming rapidly A fuel Station or Petrol station is a facility which sells fuel
and lubricants for automotive and industries. In addition to fuel and
lubricants sales, the Modern fuel service station provides different service
like, sell gasoline, fuel, motor oils, lubricants, and confectionery & Tier repair,
Car Wash, and super markets and offices service. This indicates that the
investment in the fuel station plays a significant role in the regard, mixed
economic development of the country.
A gas station which also called a petrol station, filling Station, fueling station,
or service Station is a business facility which retails gas oil (petrol), diesel
and lubricants for motor vehicles. Gas stations offer one of three types of
service to their customers: fall service, minimum service or self-service.
perhaps a small tip and a minimum service gas station has attendants that
operates the pumps This is often required due to Laws in some cities that
prohibit customers from operating the pumps themselves Although the gas
station industry can be said to be a competitive industry. But it does not in
any way stop entrepreneurs who are creative and financially capable to still
make headway in the industry. It is indeed a profitable industry especially
when the business is well located. No doubt busy highways and busy cilices
with growing population is highly suitable for gas stations. The catch 1s that
it there are automobile users in any city, then the city would have need for a

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gas station
Ethiopia has experienced a lot of growth over the past decade and a half
both economically and in demography. This pushes for more petrol stations
around the country; especially around the Furi Sub-city the demand supply
gap is high. This growth has consequently increased the number of investors
and visitors. And the people of the Dana town need a petrol station to stay
close their business. This project aims at providing this target market
requisite petrol station with full facilities and Motel building service for the
area. Our mission is to successfully build, promote and provide quality fuel
station. We plan to create an environment of convenience that surpasses the
standard level for other petrol station in area. The client of this petrol station
development will have every need met to ensure a total and comprehensive
comfort.
Petroleum products are among the most valuable natural resources
abundantly available in our country while the country is not making it
functional still. Ethiopia and people everywhere use petroleum products as a
fuel in their automobiles, generating sets industrial plants and for cooking
purposes in most of the area of the country, thus making petroleum products
an essential commodity that is needed for the daily operations of individual,
industrial and national activities. Ethiopia being non-oil producing nation,
however still relies on imported petroleum products for the servicing of the
economy. Such petroleum utilized by almost everybody on daily basis at an
average of 10 liters daily usage.
The Ethiopian economy has been registering extraordinary, double digit, and
economic growth for the last nine years. When there is fast economic growth
in one nation the income of the citizen also increases this phenomenon
changes the life style and modernization of the citizen.
In order to keep the economic growth long lasting there should be parallel
growth and linkage in all sectors of the economy such as manufacturing and
service (tertiary) sector. The development of hotel as one part of service
sector has a great contribution to the economy in different ways.

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However, the implementation of the fuel station project is concentrates in

main woreda of the nation. Hence, further investments in these areas are
very vital for better service provision for the citizens through that it supports
the economic development.
The government of Ethiopia has developed that good investment policy
packages and other
sectorial reforms at federal and regional level to attract a huge private
investment for the wellbeing of the nation and its citizens as a whole. Besides,
it is also currently implementing the five years’ growth and transformation
plan (2010/11-2014/15) that gave a space for the development
industrialization and tertiary sector by private sector.
Like the federal government investment policy packages and incentives, the
South Ethiopia regional state government has been exerting its maximum effort
to expand investment opportunities in the region, so as to foster the economic
development of the region and subduing the region’s big enemy that is the trap
of poverty. Therefore, the regional government has been prepared a viable
business environment to attract many domestic and foreign investors so that
the dream of making poverty history turns to be true.
Therefore, the visible market gap, attractive investment policies and deep
interest to contribute for the development of birth town attracts the owners of
the envisioned project to establish Fuel Station Company in, Furi Sub-
cityadministration of sheger city Eoromia region.
1.1. Purpose of the Document
The objective of this feasibility study is establishment of fuel station aid
potential entrepreneurs to facilitate investment and provide an overview about
petrol filling station business. The project feasibility may form the basis of an
important investment decision and in order to serve this objective. The
document covers various aspects of the business concept development start up.
The document also provides sectorial information brief on government policies
and international scenario. Which have some bearing on the project itself? This
particular pre-feasibility is regarding “fuel filling station which comes under

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FURI SUB-CITY

“petroleum sector”
1.2. Crucial Factors & Steps in Decision Making for Investment
 Key success factors
Following factors are the key in making this project profitable:-
 Location of the project will play a pivotal role in the successful running of the
fuel station. The daily turnover of the cars largely depends on this important
factor.
 Selection of proper equipment is another key for carrying out of successful
operations of the proposed project.
A. Opportunities
The proposed project would have a number of competitive advantages:-
 The project will increase the number of fuel station and provide fuel to more
customers reducing the problem of fuel scarcity in the area and reducing the
cost. The City is a good location because of the high rate of vehicular
movement in and out of region.
B. Threats

The proposed project will be following threat:-

 The processing of license may take time because of the satiation in the
country.

 Threat of likely increase in the prices of the petroleum facilitated by

the government as a result of the planned deregulation and removal of fuel
subsidy,
2. Objectives of the project

2.1. General Objectives

 The general objective of the project is to establish the fuel station with full
facility packages (modern car wash, lub. & grease change, cafeteria) with a
capacity of serving 200 cars per day.

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2.2. Specific Objective

 The market demand for fuel station service center is going to increase
continually. Currently, the expected demand of this service is assumed to
increase at high average growth rate. Like any business enterprise and
establishments of its kind, the project is basically planned with an objective of
generating profit for the promoter. Beyond that, it is also aimed to promote the
following objectives.
o To establish fuel station
o Implementing a cost-effective promotional strategy that will maximize
awareness for the quality of petrol station and other facilities,
o Aiming at exceeding the customer's
expectations,
o Providing high quality petrol station at
minimized cost,
o Provide direct and indirect employment to a large segment of the
population and reduce unemployment,
o Increase Government revenue through different forms of taxes which
in turn used to facilitate social and economic development,
2.3. Profile of the Promoter
The promoter of the project Shimalis Bulto is a known business entrepreneur
in the area and also engaging in different business in FuriSub-city and
surrounding area. In addition, the owner of this project hope this project to be
the first of many other developmental projects to follow as they look forward to
share the responsibility of fighting poverty, reducing unemployment here in
Ethiopia. The promoter accumulated diversified skills in the area and also
adopted working with many people. Thus, it is these experiences which
primarily motivated this investor to develop the inception of this project idea.

The feasibility of the project has been carefully assessed and the promoters are
confident that it will be a total success. The business will be run by a team of
competent management professionals who have acquired practical

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achievement in related business fields. The marketing oriented approach to

placement of products and distribution will be primarily based on the need and
preference of the customers and end users.

The promoter also is visionary and ambitious business, who is committed to

make a difference in traditional business practice by approaching it in an
innovative way. The promoter is currently seeking to establish Fuel Station
project which shores up the development base the country is looking for; as
well as meets the growing demand of the service in widest ranging like hotel
and tourism sectors.
2.4. The Economic Significance of the Project
The envisaged project deemed to contribute to the economic development of
the region in general and the district/zone in specific with following ways:

1. Provide better service

By providing quality services, the project will satisfy the demand of the
customers.

2. 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 and payroll taxes are collected from undertaking
business activities. Therefore, the project has been serving sources of revenue
for regional government.

3. 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. In this regard, project
will hire 32employees.
Besides, during the construction work of the project extra jobs will be created

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FURI SUB-CITY

particularly for local community in construction part

4. Benefit for Local Community

Apart from employment opportunity for local community, as a corporate

responsibility the project has been engaged in different development activities.
This will better worth the community in particular and contribute for the
development of the nation as a whole

5. Stimulate the Local Economy

The project will increase economic relationship and transactions
among different actors in the local economy.

2.5. Location and Premises Required

A. Project Location
Sheger City was founded on October 22, 2022, with the objective of promoting urban
growth around Addis Ababa to provide influence and financial advantages for dispersed
small towns including Koyefeche, Burayu, Furi, and Sebeta. The administration
comprises 40 rural Kebeles, 36 districts, and 12 sub-cities, with its headquarters
located in the Saris sector of Addis Ababa(Source: Kallacha Oromia, 2023)
4. Technical Study

4.1. Description of the project Service/ Product mix

Ethiopian economy has been registering extraordinary, double digit economic growth
for the last nine years. When there is fast economic growth in a nation, the income of
the citizen also increases und this phenomenon changes the life style and monetization
of the citizen.

In order to keep the economic growth long lasing there should be parallel growth and
linkage in all sectors of the economy such as manufacturing and service sector. The
development of fuel station as one part of service sector has a great contribution to the
economy in different ways. However, the expansions of fuel station service business

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are concentrated in main city of the nation. hence, further investment in these areas is
vital for better service provision for the citizens, which in turn support fast, the
economic development.
In addition to the above facts, the following points are considered by the owner for the
project justifications;

 high economic activities and investment

 Geographical and political importance of the town
 High triatic movement of the town.
 Expansion of infrastructural development of the town.
 The government of Ethiopian promising five year growth and transformation
development plan (2011-2015), the will bring prosperity to its citizens with
collaboration with private sector investment
Products or services the business will provide:

Shimalis Bulto Gas Station and super market are focused on offering a professional
service in line with the growing demand for well-equipped Fuel Station and super
market facilities in town The fuel station will provide a comprehensive fuel station
services it fuel and lubricant sales, car wash services, oil change and tier repair
services, and other services in the city. The fuel station will create better employment
and business opportunities for the community at large

Opening a Gas Station requires great innovation in service.

Fuel Station will offer the following diversified service.

 Provision of retail gasoline and diesel

 Selling automotive related products such as oil and lubricants.
 Automotive repair services is. wheel Balancing, wheel Alignment and Vulcanizing
 Selling soft drinks, snack. groceries and selected household items
4.2. Construction work and Technology

4.2.1. Construction schedule

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The construction project is proposed to be started on may , and is expected to be

finished on June 2027. as seen in the abbreviated construction schedule above, a
majority of the schedule’s time is made up of five major activities; Concrete, building
Enclosure, masonry, mechanical &HVAC and Electrical installation. Concrete activities
include processes such as placing foundations and slab on deck. The Building Enclosure
Phase includes erecting the scaffolding that will allow for exterior sheathing installation
and bricklaying.

Mechanical and Electrical install coincide with each other due to the need for
coordination between the two divisions. There are several periods of construction
during the schedule in which there are multiple construction activities occurring at the
same time.

The construction site must be organized accordingly as these processes take place. As
with any construction project, the goal of the schedule was to complete all construction
activities before the required Date of completion.

This date of completion is practical based on the time of year in which the building will
be completed. The team allowed a two-week contingency for any setbacks. Typically,
winter construction tends to cause unforeseen delays that negatively impact a
construction project. These conditions can and will almost undoubtedly impact the
project schedule by causing unforeseen delays and project inefficiency.

4.2.2. Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail, the rest of
the building had designated spaces but n set layouts. It was at the discretion of the
project promoter to devise typical layouts for the non-detailed Medium market center
and warehouse. To make sure that the building’s layouts were practical, the project
owner researched typical architectural layouts for Market center and warehouse. The
walls and partitions throughout the floor were congruent with the structural frame and
column locations.

4.2.3. Structural design

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One of principle deliverables of our project is the structural design of the building. The
structural bays were coordinated with the layout of the building adjustments were
made to the bays if specific layouts are necessary. The frame was made up of a grid
with repeating standard structural bays. Included in the structural system are bay
sizes, shape and size of structural members, floor compositions and curtain walls.
These elements were established to resist gravity ad lateral loads as appropriate.

The gravity load design was completed for two frames; one of structural steel and one
of reinforced concrete. The structural steel frame was chosen for further design based
on cost per square foot, local availability of material and constructability
considerations, such as erection and fabrication. The steel system was then designed
for lateral loading with necessary adjustment being made to framing.

4.2.4. Reinforced concrete

The project group prepared hand structural design calculations for a typical bay of a
reinforced concrete frame. In all reinforced concrete bay designs, a superimposed dead
load of 7.5 pounds per square foot was assumed for mechanical equipment, floor
coverings and ceilings.

Similarly, the design of the typical bay accounted for the use of different commercial
space, in which a live load of 125 pounds per square was assumed. Loads were
calculated based on the requirements of the minimum Design loads for Buildings and
other Structures.

4.2.5. Foundation Design

The design of a superstructure may be accurate, have considered all possibilities and
still fail because the substructure is incapable of distributing the applied loads to the
supporting soil.

Foundation design takes more into consideration than merely the loading from the
columns. While the main part of the project focused on the structural frame and its
alternate designs, a preliminary foundation plan was designed based upon maximum
load carried from the superstructure through the columns. The foundation design

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conducted by the project team consisted of the selection of foundation type,

determination of the bearing capacity and the design for typical interior and exterior
spread footings.

4.2.6. Construction Plan and process

The project team developed a coordinated project schedule and construction plans that
would reflect the expectations for an actual construction project. The project schedule
was developed using the preliminary designs given to the project team.

Additionally, the group considered typical construction activities and durations taken
from similar construction projects as well as realistic constraints on building
development. For instance, it is necessary for the structural frame to be completed
before concrete can be placed for the slab on deck. Hand drawn construction plans
detailing site entrances and storage areas were coordinated with the project schedule
to give the reader visualizations of the construction site set up through various periods
of the construction process.

The construction process for this project is normally a disjointed three mages
development by which the conceptualized need of the promoter of this project is
translated into a functional facility that will meet their needs in terms of time, cost and
quality.

Based on a general program of the project owners the consultant who is going to be
hired makes site studies, develops structural designs, prepares drawings and
specifications, determines quantities involved and estimated the resultants costs. All
these activities will be done in the first phase of the project which is the design stage
after the document are produced by the designers have been received, and the works
secured the project is supposed to enter the tendering stage. At this stage contractor
study the project document analyze and subsequently determine the construction
methods, built up their unit rates and submit their bids for the works. The promoter of
this project intends to compare the bids and award the contract for the lowest
responsible bidder. This, is of course, presupposes that the favorable proposal does not
exceed the allocated budget.

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After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and
cash flow forecast. After the award is made and the contract signed between this
project owner and the contractor, the project constructor is expected to prepare and
submits a detailed construction program which includes material schedule, manpower
requirement and cash flow forecast.

4.3. Utilities

A number of utilities world be put in place in order to ensure smooth functioning of the
project. These utilities include:

 Water Supply,

 Supplementary Electricity supply.

 Telephone line Internet Broadband

 Fuel, Oil and lubricant

 Drainage Facility

B. Land Requirement
The total land required by the project is estimated to be 5000M 2. The premises required and land use
plan is indicated in table below;
Table.1: Premises required and land use plan
SN Description
LAND NEEDED (M2)
1.3 Mini Café and Restaurant 100

1.4 Different Offices 500

2 Guard house 375

3 Store 100
4 Generator House 200

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5 Fuel Station area 3625

6 Parking, green area and road
100
Total 0

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3. MARKET STUDY
3.1. Scope of the Market Study

The petroleum sector has shown a dynamic change in the past few years. The

reason for this could be rapid economic growth and a supporting public

infrastructural development. Other factors relevant in the specific case of

petroleum are the large increases in national and international businesses,

particularly firms in the services sector. The business of fuels in Dana Town in

booming highly due to the recent rapid growth experienced in Ethiopia. As a result,

a good number of local and international organizational are coming in place.

The project is targeted for Dana town district cross the vicinity and surrounding

area. Hence, the scope of market study of this project concentrates on the Furi Sub-

cityand surrounding rural villages in general and the kebele in specific scenario.

3.2. Future Market Demand

Proposed fuel station will be located on the main road that passes to SHEGER CITY. This is an extremely
busy highway with thousands of vehicles using the highway on a daily basis. The nearest gas station is
about seven km and proposed gas station knows it’s located in a strategic location to offer key services to
vehicle owners. In addition, the business intends to sell automotive products such as oil and different types
of lubricants which are essential products to car owners. Given the scarcity of gas stations in the area, the
proposed gas station intends to capitalize on the untapped market by setting up a fully equipped and
professionally managed gas station. Motorists are the key customer target included in this gas station
business plan.
Petroleum is one of the most traded items in the world. Petroleum is a necessity product and the nature of its
demand is inelastic. Unlike other businesses whose demand is impacted by price and other economic
variables, the consumption of petroleum products in Ethiopia continues to increase even in the face of any
economic slowdowns.
Demand for petroleum products such as fuels & Lubricants in Ethiopia are massively growing at an
average rate of 10% over the last five years (since 2004). As of 2009, the overall size of demand for

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fuels & lubricants amounts 2.5 billion liters and 25 million liters respectively. In Ethiopia more than half of
among the overall size of demand for fuels & lubricants amounts 2.5 billion liters and 25 million liters
respectively are consumed in Addis Ababa and its neighbor towns.
At present there are 710,000 vehicles in Ethiopia with more than 70 percent of them (410,000)
registered in Addis Ababa? However, the number of fuel stations in the capital stood at only 100.

3.3. Past Demand

According to mot report due to the increasing price of petroleum most vehicles currently are Naphtha and
those vehicles which are using Benzes are converted in to Naphtha.
Table: 2 Inspected and Registered Vehicles by License and Plate Type
No. Types of License 1999.00 2000/01 2001./02 2002.03 2003/04 2004/05 2005/0 2007/08 2008/09
6
1. Government 16081 16611 17278 17070 20013 21581 27365 27210 31200

2. Mass Organization 239 256 294 261 1657 2271 2880 3852 4417

3. UN 1015 1001 954 1056 1202 1221 1548 1386 1589

4. C.D 819 815 921 1060 1050 1099 1394 1318 1511

5. AID Organization 3794 4280 4219 4052 4384 4828 6122 6292 7216

6. OAU 134 132 157 217 225 250 317 330 379

7. Commercial 30851 33311 34995 34931 50046 58120 73697 81761 93752

8. Taxi 10156 10632 12010 12506 14523 20062 25439 34282 39310

9. Private Commercial 9859 10661 11531 8245 14988 17263 21890 24014 27536

10 Private Cars 42258 43858 47905 53540 58221 65930 83600 89555 102690

Total 11206 121557 130264 132938 166309 192625 244252 270000 30960

3.4. Forecasted Demand

According to transport ministry the growth of vehicles is 7% and 9.4% for minibus and bus’s
respectively. Based on the above data the forecasted number of the vehicles in the country for the coming
10 years is as follows.

Table: 3 Forecasted numbers of the vehicles in the country for the coming 10 years

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No. Types of 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
License
1 Government 32448 33746 35096 36500 37960 39478 41057 42699 44407 46184 48031

2 Mass 4594 4777 4969 5167 5374 5589 5812 6045 6287. 6538 6800
organization
3 UN 1653 1719 1787 1859 1933 2011 2091 2175 2352 2352 2446

4 CD 1571 1634 1700 1768 183 1912 1988 2068 2151 2237 2326

5 Aid 7505 7805 8117 8442 8779 9131 9496 9876 10271 10681 11109
Organization
6 OAU 394 410 426 443 461 480 499 519 539 561 583

7 Commercial 10256 11220 11275 13429 4696 16072 17583 19236 21044 23022 25186
5 6 3 2 5 4 2 4 6 4
8 Taxi 42062 46015 50341 55073 60250 65913 72109 78880 86303 94415 10329
7 0
9 Private 29464 32233 35263 38578 42204 46171 50511 55259 60454 66136 72353
commercial
10 Private cars 17457 19098 20893 22857 25006 27356 29928 32741 35819 39186 42869
3 3 5 5 1 7 2 5 2 2 7
Total 39682 43152 46938 51069 55776 60497 65868 71730 77830 85119 92750
7 8 7 6 6 0 5 9 2 3
Sources Ministry of Transport
There are a number of factors which creates demand for Fuel Station in the area. The
following major factors are identified;
 Economic activities

 Population

 Location Importance

 Infrastructure (road)

 Availability of different institutions

 Energy Deman
These major demand factors for the project are explained as follows

1. Location Importance
The planned fuel station use project will be established in Sheger city, where
the different construction is flourishing from time to time. Because this cash
crop area has easy access to the fundamental utilities and other facilities
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required for construction area such as treated water supply, electric power,
access to telephone line and easy access for transportation and market outlet.
Moreover, the regional government has been undertaking various measures
help boost the growth of investment endeavors in the area by allotting land,
and providing efficient municipal services
2. Infrastructure (Road)
In the district there exist asphalt all whether and dry whether roads that
connects different areas that will create a demand for the fuel station services.
3. Availability of Different Institutions
In the district, there exist many governmental bureaus. Besides, there exist
non-government organizations (NGOs) and private companies. All these
institutions are potential market demand for the project
4. Energy Demand

The major source of domestic energy supply is agri-wastes, followed by

firewood, animals dung, charcoal and kerosene. Hence, there will be a good
market demand potential for the envisioned project (fuel station) in
consumption of fuels for vehicles.
3.5. Market Supply
In the Furi Sub-citythere exist few service provider organizations. Standard
cafeterias and fuel station centers. Besides, all quality services in one
organization is almost nonexistence in the woreda kebele’s abroad.
3.6. Target Customers

The proposed gas station intends to open in an area with a lot of business
potential. There is no doubt one of the greatest strengths and advantages
outlined in this gasoline station business plan is the strategic location. The plan is
to implement a unique business model that focuses on an exemplary customer
service approach and provision of topnotch products and services. The proposed
gas station will recover its entire startup capital after three years in operation.
There is a projection of annual sales growth of between 20-25%.
The target customers of the envisioned project are

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 The residents of the kebele and the surrounding area

 Merchants and drivers

 Business Community

 Different occasional guests

 Different institutions (Government, NGOs and Private)

 Domestic and Foreign tourists and visitors

3.7. Market Prospects

From the above analysis of market, it can be deduced that there is a huge gap
between demand and supply for this business in the kebele as well as in the
district that will give a lucrative market for the envisioned project.
3.8. Marketing Promotion and Strategy
To reach customers different marketing ways will be used. Among the
different marketing strategies and tools for promotion controlling the market:

 Printed and non-printed forms of advertising,

 Sponsorship of key government activities and public support mechanism.

 Seasonal discount pricing for guest houses and different

others customer centric marketing strategies will be used by
the company.

The Fuel Station under discussion will have diversified marketing strategies that could enable it
come up with the different competitors in the market. Moreover, customer satisfaction will be the
key marketing strategy of the building. Generally, the project has a competitive advantage since
there are no many standard fuel stations in the town.
3.9. Service program

The organization will initially operate at 70% of its capacity and will reach 100 %( full capacity)
service provision in the second year.

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3.10. Sales Plan/Capacity

SN Description Measurement Daily Monthly Annual

Production production Production
Fuel Station
1 Kerosene Liter 60050
2 Benzene Liter 50030
3 Diesel Liter 100005
4 Lubricant and oil Liter 1500
5 Cafeteria serive No. 15 450 5400
6 Car Wash No of cars 5 150 1800

4. SERVICE MIX AND CIVIL WORK OF THE PROJECT

4.1. Service Utility

The Fuel Station will provide the following service. The project will provide
different fuel energy (like kerosene, benzene and Diesel) for end users by
franchise based business from one of the oil company. Besides, the projects will
also sale different oil and lubricants for consumer. Moreover, service like car
wash and parking will be provided by the company.

4.2. Civil Engineer Building and Civil Works

As indicated in part 1 the total land requirement for the project is estimated to
be 4000M2.The buildings are planned to accommodate fuel station, and other
utility requirements as well as green areas and parking.
In general, the buildings must be capable of being kept clean and provision
should be made for keeping the sewerages drained out properly and room
temperature is attained to keep healthy environment. In most environments,
equipment should be totally enclosed in a light structure: where the climate is
suitable. A concrete floor, which can be swept, is usual.
The site will be encircled by a chain linked fence fastened to concrete posts.
The project construction is designed by professional engineers and
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construction will be done under close supervision and Furi Sub-cityof the
engineers.

5. ORGANIZATION AND MANAGEMENT

5.1. Organization and Management

The organizational structure should be in a way that the fuel station service can
able to achieve its objectives as well as the satisfaction of standard
requirement.
5.2. Man Power

The total manpower required for the building will be 32 persons. The
manpower list and the corresponding labor cost are shown in Part five of this
document.
5.3. 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 fuel station. 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 the owner.

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Administration
section

Firm Manager Secretary

General Manger (owner)

Security

General service
Fuel section section
Coordinator Oil and liquor
section

Marketing section
Finance section
Accountant

The General Manager’s

The duties and responsibilities of the general manager are;
 He/she will plan, organize, direct and control the overall activities of the fuel station.
 He/she will devise policies and strategies that will enable the organization profitable.

 He/she will plan, organize, direct and control the human and non-human
resources of the organization (other departments) so as to achieve the short and long
run objectives of the organization.
A. Service Management Department
This is the core department that has six main sections (Fuel station, Car Wash, Parking area, Engine
Oil Shop, Vehicle Spare Parts and employee rooms) the main duties and responsibilities of this
department are

 To render those outlined services of the project and manage the overall service delivery
system of the motel and fuel station in line with the customer need and satisfaction.
 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the fuel station Car Wash, Parking area, Engine Oil Shop, Vehicle Spare Parts and
employee rooms’ services that will increase customer’s satisfaction.

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B. Administration & Finance Department

The Admin & Finance Department of the Hotel is responsible for undertaking the
following activities:
 Manage the human resources and control employee’s activity
 Will manage non-human resources of the organization, which include: effective handling of the
different inventories and devise strategies of controlling against fraud and damage.
 Will provide the right material or inventory to the center with right price at the right time.
 Will plan, organize direct and control the financial transaction of the building by using all the
necessary documents.
 Accountant and cashers that will collect money from the customers.
 Will develop sound financial control system by developing modern financial control systems.
 Will prepare the annual financial statements and prepare condensed reports for both the General
Manager and other concerned government body.

C. The Marketing Department

 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Will develop the marketing strategies.
 Will develop effective customer handling strategies
 Plan and execute the promotion mix

6. FINANCIAL REQUIRMENT AND ANALYSIS

6.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged fuel station is estimated to be
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40,000,000 Birr.
Table 4: Total Initial Investment Capital

Description Cost in birr

Land, Building & Construction 8,600,000
Machines & Equipment’s 12,000,000
Vehicles and generator 7,000,000
Office Equipment 111,500
Total Fixed Investment Cost 27,711,500
Working capital 12,138,500
Pre service Expense 150000
Total 12,288,500
Total Initial Investment Capital 40,000,000

6.2. Fixed Investment cost

The project fixed investment cost includes those cost to be used for building construction, purchase of fixed
asset (furniture and equipment’s) and other cost to be spent on designing and project proposal preparation.

Accordingly, the construction cost which covers the largest proportion of the total project capital calculated
to be 8,600,000.

Table 5: Construction cost

No Description unit Unit price Total amount

1 Building Birr 5,000,000
2 Store ,Kichen,septic tank,and toilet Birr 400,000

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3 Gas station pump installation Birr 3,000,000

4 Parking and well developed garden Birr 200,000
Total 8,600,000

Table: 6 Machineries required for the Fuel service is estimated to be ETB 12,000,000

Description Unit Quantity Unit price Total amount

Birr
Fuel machineries 6 600,000 5,500,000
Birr
Steel structure Lump - 400000
canopy
Birr
Fuel tank 6 300,000 2,800,000
Birr
Dispensing fuel 2,500,000
pump
Plumping works Birr 200,000
Birr
Greasing pumps, 600,000
Compressors
Total 12,000,000
-

Table: 7 Vehicles and Generator

Unit Price in Total Price in br.
No Description Qty Remark
br.
1 Four wheel drive 1 4,000,000 6,500,000 Duty free
4DW
2 7.5 KW Diesel 1 500000 500,000
Generator
Total 7,000,000

Table: 8 Office Furniture and Equipment

Unit Price in Total Price in Br.
SN Description Unit Oty Br
1 Managerial tables with Birr 1 100000 10,000
Chair
2 Office tables with Chair Birr 3 5000 15000
3 Secretarial Chair with table Birr 2 5000 10,000
4 Computer with Printer Birr 1 30000 30000
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Guest chairs
5 Birr 3 2000 6000
Carpet and curtain
6 Birr Ls - 6500
7 Filing Cabinet Birr 2 2000 4000
8 Shelf Birr 1 10000 10000
9 Fax and Telephone Set Birr 1 20000 20000
Total 111,500

Table:9 Pre-Service Expense

No Description Cost
1 Designing 100,000
2 Land Payment 20,000
3 Project proposal, Promotion ,Licensing fee and 30,000
others
Total 150,000

6.3. Initial Working Capital

The initial working capital cost of the project mainly included administrative cost like salary, fuel and
that of variable administrative cost like stationary, repair and maintenance, utilities, insurance, tax and
other expenses is estimated to be birr

Tabel :10 Direct cost the company that imports them sets their selling price
Total
S. Required unit cost per cost per Annual purchasing
N Items volume/month/litter litter month price
1 Diesel 8000 36.5 292000 3504000
2 regular petrol 8000 38.5 308000 3696000
3 Kerosene 3000 28.5 85500 1026000
4 Oils 190 97.851 18591.69 223100.3
704091.7 8449100

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Table: 11 other working Capital breakdown of the project

No Description Unit Total
Monthly Yearly
1 Employee Salary Cost Birr 44000 528,000
2 Employee benefit ,transport Birr 25% 132,000
and other (overhead cost )
3 Cleaning goods, Birr 3000 36,000
maintenance
4 Utilities and bills Birr 10,000 120,000
Total 816,000

Table: 12 Insurance, Repair and maintenance cost

Description Rate Fixed investment cost Total cost

Annual cost of insurance 1% of fixed asset 27,600,000 276,000
investment

Table 13 Repair and Maintenance cost of the proposed project

Description Rate Investment Cost Total cost
Building and construction 10% 8,600,000 860000

Machinery and equipment 10% 12,000,000 1200000

Vehicles 25% 7,000,000 1750000

27,600,000 3810000

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7. Financial Analysis and Statements

7.2. Underlying Assumption
The financial analysis of the envisioned fuel station is based on the data provided in the
preceding sections and the following assumptions.
A. Construction and Finance

Construction period 22 months

Source of finance 30% equity and 70% loan
Tax holidays 2 years

Bank interest rate 15 %

Operating Costs Increase by 1%

Salary and wages increase by 1%

Operating Costs and raw materials Increase by 1%

Raw materials increased by 1%

Sales 10% increment after 2nd year

B. Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
C. Working Capital

Accounts receivable 30 days

Raw material local 30days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days

Table 14: Sources of Fund

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Amount(in birr)
SN Description % share
1 Owners Share 30 12,000,000
2 Bank Loan 70 28,000,000
Total 100 40,000,000

Table 15: Bank Loan repayment Schedule

Year Principal Payment Interest (15%) Total Annual Remaining Balance
Payment in br
0 0 0 0 28,000,000.00
1 2,800,000.00 4,200,000.00 7,000,000.00 25,200,000.00
2 2,800,000.00 3,780,000.00 6,580,000.00 22,400,000.00
3 2,800,000.00 3,360,000.00 6,160,000.00 19,600,000.00
4 2,800,000.00 2,940,000.00 5,740,000.00 16,800,000.00
5 2,800,000.00 2,520,000.00 5,320,000.00 14,000,000.00
6 2,800,000.00 2,100,000.00 4,900,000.00 11,200,000.00
7 2,800,000.00 1,680,000.00 4,480,000.00 8,400,000.00
8 2,800,000.00 1,260,000.00 4,060,000.00 5,600,000.00
9 2,800,000.00 840,000.00 3,640,000.00 2,800,000.00
10 2,800,000.00 420,000.00 3,220,000.00 0.00
7.3. Depreciation Schedule
Depreciation for this project is estimated using the universally practiced rated of the original acquisition costs of
the assets. In view of that, vehicle machinery, building is expected to depreciate based on their life time. The total
annual depreciation cost of the project is birr 3,810,000.

Table 16: depreciation cost estimated per year

SN Description Depreciation rate Estimated cost Depreciation Per year in
in % Birr

1 Construction and Building 10% 8,600,000 860000

2 Machineries and equipment 10% 12,000,000 1200000
3 Vehicle 25% 7,000,000 1750000

Total 27,600,000 3810000

7.4. Revenue Projection of the project

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Annual revenue of the firm depends on the yearly sales amount. It is considered by yearly working
days’ capacity. The firm is expected to deliver service for 24 hours a day and all 30 days per month
and 365 days per annum. Therefore, the firm is planned to sell diesel gas of 8,500 litters, 8,500 litter of
regular petrol and 4,000 litter of kerosene per month.
It is expected that the selling prices of the fuel adjusted as per national government order. However,
currently average selling one litter diesel is birr 80 per litter. For those prices of regular petrol and
kerosene is birr 80 per litter. Therefore, to calculate annual revue collected of the fuel station this price
per litter is taken in to account. Therefore, at the initial year the total revenue collected from sales of
different kinds of gases and oils will be birr 21,552,000.00 -increases in 10% at the remaining year.
Table: 17 total revenue collected from sales of different kinds of gases
No Description Unit Sales Average Monthly Annual sales
/volume/mont selling Price sales revenue
h revenue
1 Kerosene Liter 4000 80 320000 3840000
2 Benzene Liter 8500 80 680000 8160000
3 Diesel Liter 8500 80 680000 8160000
4 Lubricant and Liter 500 200 100000 1200000
oil
5 Car Wash No of cars 200 80 16000 192000
Total 1796000 21,552,000.00

7.5. Projected financial statement

Projects are based on a number of assumption (based on these assumption complete set of financial projects are
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provided in these section these projection include profit or loss statement and statement of cash flow the projects
are proposed on an annual bases .The envisaged project will generate revenue of birr 21,552,000 during its first
year of operation and birr 23707200 during the second year of its operation on its word .The project will pay
approximately birr 4,200,000 interest on the long term loan during the first year and birr during the second
year of operation 3,780,000.00.finally the project will generate a net profit that grows from birr 3,291,275 in the
first year and to birr 7,177,749 during the fifth year of operation. .

Table:18 Profit and loss statement of the project

Description Year 1 Year 2 Year 3 Year 4 Year 5

Gross revenue 21,552,000 23707200 26077920 28685712 31554283

Cost of Expenses 12,288,500 13517350 14869085 16355993.5 17991593

10,189,85
Gross Profit 9,263,500 11,208,835 12,329,719 13,562,690
0

Cost of interest 4,200,000 3,780,000 3,360,000 2,940,000 2,520,000

Profit before tax 5,063,500 6,409,850 7,848,835 9,389,719 11,042,690

profit tax (35%) 1,772,225 2,243,448 2,747,092 3,286,401 3,864,942

Net profit 3,291,275 4,166,403 5,101,743 6,103,317 7,177,749

Cumulative 3,291,275.00 7,457,678 12,559,420 18,662,737 25,840,486

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Table 19: Project cash flow statement

Description Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Owner Equity 12,000,000
Bank Loan 28,000,000
Net profit 3,291,275 4,166,403 5,101,743 6,103,317 7,177,749
Deprecation 3810000 3810000 3810000 3810000 3810000
Total cash in flow 40,000,000 7,101,275 7,976,403 8,911,743 9,913,317 10,987,749
Cash out flow
Investment on fixed 27,711,500
asset
Working capital 12,138,500
Pre Operating cost 150,000
loan repayment 2,800,000.0 2,800,000.00 2,800,000.00 2,800,000.0 2,800,000.0
0 0 0
Tax payment 1,772,225 2,243,448 2,747,092 3,286,401 3,864,942
Total cash out flow 40,000,000 4,572,225.0 5,043,447.50 5,547,092.25 6,086,401.4 6,664,941.6
0 8 2
Net cash flows 2,529,050 2,932,955 3,364,651 3,826,916 4,322,807
Cumulative Balance 2,529,050 5,462,005 8,826,656 12,653,571 16,976,378

7.5.1. Profitability

According to the projected income statement, the project will start

generating profit in the 1st year of operation. Important ratios 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 an
increasing trend during the lifetime of the project. The income statement
and the other indicators of profitability show that the project is viable.

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7.5.2. Break-Even Analysis

The break-even point of the project including cost of finance when it

starts to operates at full capacity (year 3) is estimated by using income
statement projection.
7.5.3. Pay-Back Period

Concerning the payback the project will cover 7 years the initial cost
investment from the net cash flow within the given loan period this
indicating project is financially feasible. .

8.ENVIRONMENTAL IMPACT OF THE PROJECT

It should always be remembered that petrol filling stations once put into operation
need to be closely managed. This will ensure that the environment is always
safeguarded. It is therefore important that the site conduct regular site assessments to
provide early indication of leaks or releases of product into the ground and available
risks. If there is considered to be a very high risk, a redevelopment should be
considered. Other methods to be considered, which will point to early indications of
leaks are: There should be accurate records of stocks and sales; modern stock control
systems; associated with tank gauging systems, to provide an early warning when
stock losses are outside acceptable parameters; the project’s systems should be tested
on a regular basis as they get older, to attest they are sound; testing of both the tanks
and lines should be by precision tightness methods and; monitoring wells should be
installed around the site to give an early indication of a product release. Considering
the proposed location, construction, management and mitigation measures that will be
put in place and the project’s contribution in the provision of petroleum products and
creating employment opportunities, its implementation is considered important and
beneficial. The key effort should be geared towards safeguarding the environment. This
can be effectively overcome through close following and implementation of the
recommended Environmental Management Plan (EMP).

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Currently the issue of environment and envelopment get due emphasis and thus every
citizen called exert their maximum effort for fighting against any negative impacts on
the environment so as to result in a win-win solution on common agenda that is
creating environmentally friendly business environment. Therefore, this fuel station
project does not cause a negative impact on the environment.

Consistent with the government’s high priority of encouraging private investment in

the agriculture sector, these integrated projects aim at agricultural production with due
care to reduce degradation and improve productivity of natural resources. Given the
fact that these projects intend to utilize the rain fed cultivation, certainly these reliefs
the existing degradation pressure on rural farm land imposed by the traditional farming
system.
More importantly, the projects aim at reversing the environmental degradation trends
widely observable in the area by breaking the nexus between poverty and
degradations. In essence, the projects aim at solving the key problem area by breaking
the nexus between rural poverty, natural resource management and climate change
mainly by creating alternative and more lucrative income source for the local resource
poor smallholder farmers, who, otherwise should depend on the natural resource bases
and hence causes the degradations. The project promoters believe:
 environment and natural resource degradation are often a direct cause of rural
poverty;
 rural poverty often exacerbates environment and natural resource degradation;
and
 Climate change increases the vulnerability of rural people and the
ecosystems they depend on for their livelihoods.
Thus, opening alternative source of income by creating job opportunities within the
project can relieve the current pressure on the rural land in the project area.
Reporting, Monitoring and Evaluation
Monitoring and evaluation will be an integral part of the process implementation periodic
monitoring will be conducted by the project. Periodic monitoring focuses on follow up of the
day to day activities of each activities project evaluation on the other hand focuses on the
impacts based on its achieving will be processed on participatory with its stokeholds.

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a. Monitoring
Monitoring activities includes measuring the physical performance and quantity of the work
done, con-elation of the work done with set plan and time table.
b. Evaluation
Evaluation will be conducted three times during the project life year, at the beginning of
project life, in the middle and at the end of project life years.
The evaluation based on the overall goal and purpose. The scope of the evaluation will be:
 The extent to which purposes the project have been fulfilled.
 The expected profits will be maximized.
 Impact contributed to socio-economic development of country.

Conclusion and Recommendation

Overall, the projects have the following merits which would justify the need for giving
priority in its finance:

 The strategic objectives of the projects are highly consistent with the national
development objective which calls to “sustainably increase rural incomes and
national food security, which embodies the concepts of producing more, selling
more, nurturing the environment, eliminating hunger and protecting the
vulnerable against shocks.
 These projects are expected to create job opportunities for these potential
migrants at their nearby village and hence alleviate the pushing factor for
migrations.
 The projects aim at utilizing locally available technologies so as to encourage
the backward and forward linkage of the project and hence contribute towards
the realization of Agricultural Development Led Industrialization (ADLI) strategy
of the country.
 Finally, the projects will largely contribute towards the national economic
development by contributing to National GDP. GDP contribution originating
from the agriculture sector has more power of poverty reduction than other
sectors (a one percent GDP growth rate originating in agriculture sector has
more potential for poverty reduction than two percent GDP growth rate

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originating from the service sector).

Recommendation: - considering the viability of the project, as aforementioned,
the project is recommended for implementation.

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