Zahid CNG Business Plan

The Islamia University of Bahawalpur, Rahim Yar Khan Campus (DMS)
A Project Report On CNG Page 1


ACKNOWLEDGEMENT
All the praise is for Allah, the most merciful and beneficent, who blessed me with the
knowledge, gave me the courage and allowed me to accomplish this task. I am especially
indebted to all my teachers for instilling in me enough knowledge to be able to carry
myself efficiently during my project.
Secondly, I am bound to thank all the Manager of Chief CNG Rahim yar khan for his
inspiring guidance, remarkable suggestions, constant encouragement, keen interest,

constructive criticism and friendly discussion helped me to learn and enabled me to

complete this report efficiently.
DEDICATION
I dedicate this report to my parents and friends in recognition of their worth and to my
teachers who are the guiding force for me and it is their effort and hard work that showed
me the path of success and prosperity which would be there for me for the rest of my life.
My thanks to all those who have generously contributed their theoretical knowledge to
this report including my teachers. Without their understanding and support, completion of
this work would not have been possible. I hope people find this report useful and the
subject matter adds to their knowledge.

“Keep your dreams alive. Understand to achieve anything requires faith and belief in
yourself, vision, hard work, determination, and dedication. Remember all things are
possible for those who believe.”- (American Researcher)
Introductory Page
Name of the Business: Asian Tigers CNG Station

Location: Tranda Sway Khan Rahim Yar Khan.
It will be located near boys high school.
Nature of Business: Private Limited.
Products: CNG, LPG
Size of Business: Medium Enterprise
Number of Employees: 10 to 15
Statement of Needed Finance:

Projected Cost

Executive Summary
This report is all about the Business Plan of a CNG Station in R.Y.Khan prepared by
Zahid Masood who is the planning & feasibility coordinator of petroleum association in
Pakistan.
Industry Analysis:
At the beginning it is illustrated the industrial analysis in which it is explained the current
industry situation of CNG. In the industrial analysis the future outlook & prospective
trends of the particular sector is analyzed by keeping in mind & analyzing the
competitors in the CNG industry in order to check the strategies used by them & then to
use the mix of strategies by applying the innovative ideas in our venture. After that the
strategy for marketing is build by using different segmentation report then that of

prevailing in the market. For efficient & better utilization of available resources industry
& market forecast has been done in order to analyze the true market demand for CNG.
Description of Business:
This head of the Plan covers the introduction stage of the business by defining the nature
of the business i.e
• Products.
• Services.
• Size of Business.
• Office, Equipment & Personnel.
• Background of the Entreprise.
Production Plan:
This head covers the following aspects of the Business Plan.
• Manufacturing Process Identification.

• Operations Performing.
• Physical Plans.
• Names of the Supplies.
Operational Plan:
It covers the aspects like how we will operate our products or services for the target
customers. It covers the following heads of information:
• Venture’s Operations e.g Head Office, regional plants etc.

• Flow of orders of goods & services by the customers.
• How the technology Utilization is to be carried forward.
Organizational Plan:
The organizational plan covers the following heads of discussions:
• Form of ownership. (Sole Proprietorship, Partnership,

Company)
• Nature of Business. (Public Limited or Private Limited)
• Identification of Ownership & principal shareholders.
• Authorities & responsibilities of the employees.
• Job descriptions & Job specifications. (JDR, KSA
respectively)

• Organizational Hierarchy.
• Mission & Vision.
Marketing Plan:
It is an very essential element of the business plan which describes the market conditions
& strategies related to the functions that how the product or service will be distributed,
priced & promoted. The heads under the marketing plan are:
 Conducting the marketing research.

 Defining the mission & vision of the organization.
 Situation Analysis:
• Environmental Analysis.
• Pest Analysis.
• Venture Background. (SWOT Analysis)
• Competitive Analysis. (Porters Five Forces Model)
 Marketing Objectives & Goals.

 Marketing Strategies & Action Plans:
• STP (Segmentation, Target marketing & Positioning)
• Marketing Mix.
 Marketing Budget Decisions.
 Controlling the marketing plan functions.
Financial Plan:
Financial Plan is the most important part of the Business Plan as it actually describes
Resources composition of the business. It includes:
• Sources of finance.
• Performa of Income Statement.
• Performa of Balance Sheet.
• Application of Funds.
• Break Even Analysis.
• Ratios Analysis.
Risk Assessment:

In this stage we will identify the potential risks that we will have to face in this particular
business & then decide about how to minimize them in order to develop the business
towards progress. It includes:
• What Risks are to taken?

• How the risks are to be assessed?
• What shall be the procedure to minimize their effect on our
business?
Annexure:
This will be the last stage of the Business Plan describing the sources of information &
the supportive material used in order to shape this business plan. It includes:
• Supportive material.
• Related Articles.
• Related Journals.
• Websites for this particular venture.
• News Papers.
• Magazines.
• Etc etc
Industrial Analysis:
Introduction:
Natural Gas is one of the most valuable natural resources abundantly available in our
Country. The people of Pakistan have been using the petroleum products as a fuel in their
automobiles, thus spending a huge amount of foreign exchange on import of petroleum
products. Moreover, the Government of Pakistan has taken certain concrete steps in order
to promote the use of natural gas as a fuel substitute in the automobiles. Due to the efforts
made by the Government and comparatively low prices of gas, more than 600,000*
vehicles have already been converted to operate on Compressed Natural Gas (CNG)
fueling system all over Pakistan.
Due to high cost of petroleum products, lots of vehicles are switching over to CNG. At

present, there are more than 2500 CNG stations operating in the Country and this number
is insufficient to meet the rising demand of CNG in the coming years. The total project
cost for setting up the CNG filling stations has been estimated at Rs.31.13 million. It
includes land, building, CNG equipment and machinery, spares, along with the
preliminary expenses and working capital.
Compressed Natural Gas (CNG) is produced when the natural gas is compressed into
cylinders to be used as a fuel in the automobiles. The compressed natural gas has been
used as an automobile fuel since 1940, and over the years, the technology has been
modified and refined. In the recent years, the usage of CNG as an automobile fuel has
significantly increased because of its low cost and environment friendly nature.
CNG Policy:
The Government of Pakistan has offered number of incentives for encouraging the use of
CNG in the country. Some of these are summarized below:
• Strong Government commitment to promote usage of

CNG.
• Liberal policy of providing license for CNG retailing.
• Deregulated market price of CNG (for the consumers).
• Priority of providing natural gas connection to CNG
stations.
• Exemption of import duty and sales tax till June 2005 on
import of machinery and equipment, CNG kits and cylinders.
Future Outlook & Market Demand:
Transport is one of the most essential sectors of an economy and direct customer for this
project. This sector facilitates the peoples not only in traveling but also in the
transportation of goods and services throughout the country. The population of Pakistan
is growing with the rate of around 2.0 percent per annum which shows an increase of 3.2
Million people each year. In order to facilitate the growing population not only the
number of motor vehicle is increasing (5.287 to 5.366 Million in years 2006, 2007
respectively) which has increased the demand for petroleum products throughout the
country. Not only transport sector, but Industrial, agriculture and other sectors of the
economy are also growing with a greater pace hence further strengthening the demand for
petroleum and lubricant products.

According to the GOP statistics the petroleum products and gas consumption accounts for
approximately 70 percent of modern energy supply in Pakistan. Electricity (15 percent),
LPG and coal account for the balance. The transport sector (the direct customer for this
project) is the largest user of petroleum products (59 percent), followed by power (29
percent); industry accounts for about 12 percent, and the balance is used in other sectors –
including the residential sector.
Till the end of 1990s the market was mainly captured by the four oil marketing
companies (OMCs), PSO, Caltex (Chevron), Shell, and Attock Refineries. After
analyzing the strapping market demand and special government incentives, few other
OMCs have also entered the industry, and expanding their businesses through the
establishment of petroleum retail outlets (fuelling stations) throughout the country.
Market Demand:
The petroleum products account for approximately 40 percent of modern energy

consumption in Pakistan. Consumption of petroleum products grew sharply during the
1980s at about 7 percent per annum, but slowed to about 2.5 percent during late 1990s
and has gained a momentum in 2007-08 to about 9.31%.
Fluctuations in Demand of Petroleum Products

The demand is expected to increase around 17 million tones per annum by the year 2010-
11. Thereafter, it is expected to further increase to around 19 million tones by the year
2017-18. The production of refined products by the local refineries during the year 2003-
04 was 10.27 million tons. The deficit products import were 5 million tons in 2003-04
while it will remain around 5-6 million tons per annum up to year 2010-11. Thereafter, it
is expected to increase to a level of around 8.0 million tons per annum by the year 2017-
18.
Pakistan has incurred an import bill of $ 4.7 billion for crude and petroleum products in
2008-09 and projected import bill for the year 2009-10 is about US $ 5.4 billion. Recent
up-ward price trend in the international market indicate increasing gap between import of
crude and finished products.
In order to bridge up the above demand and supply gap and to improve the Petroleum
products supply infrastructure, different incentives have been given under the Petroleum
Policy/Investment Policy 2005 to attract local and foreign investments in the sector.

Analysis of Competitors:
The market of competitors for CNG business is highly concentrated. The PSO has got the
major market share of around 65% and the remaing portion of market is shared by other
oil marketing companies (OMCs) like Shell, Caltex, Attock Refineries, Total Parco and
Admore. The market shares are listed in the table below:
The above diagram explains the percentage of market share that each company possesses.
Description of the Business:
This is the third stage of the Business Plan. It includes the following aspects of
information:
Products & Services:

There are following products under the CNG station.

• CNG.
• LPG.
Size of Business:
The size of the business is medium sized having 8 to 10 workers engaged in it.
Project Investment
Project Returns
A minimum of 202 cars is required to be filled daily in order to operate at breakeven.

Considering the market trends and number of vehicles being converted into CNG fueling
system, initially the project would be able to attract and serve at-least 202 vehicles per
day.
OFFICE, Equipment, Personnel:

Building:
There are certain civil works required to be carried out at the proposed location. The civil
works would be carried out on an area of 2250 square feet. The rest of the area will be
floored with tuff tiles. Civil work includes the following:
• Office.
• Control Room.
• Compressor and Cascade/Cylinder Storage Room.
• Shed for Dispenser.
• Toilet/washroom.
• Underground Gas Piping and Power Cables.
• Flooring.
The total cost of construction is estimated at Rs.1.7 million. Details for the said cost are
as follows:
Construction Cost

Equipment:
The following equipment is required for a CNG filling station:
Gas Compressor:
The purpose of compressor is to compress the gas enabling it to discharge the gas for
refueling. This compressor requires an input pressure of 8 or 15 PSIG5 from the main gas
supply with the outlet pressure of 3,625 PSIG. With this discharge pressure, the
equipment can refuel 50 vehicles per hour.
Electric Control Panel:

Electric control panel is required to operate the gas compressor. This panel will be
mounted in the control room.
Storage Cascade:
Storage cascades/cylinders are used to store the natural gas.
Priority Panel for Vehicle Priority:

During rush hours, the compressor is directly connected to the dispenser, bypassing the
storage cascades/cylinders with the help of priority panel, facilitating the refueling of
vehicles at a faster rate.
CNG Dispenser high flow dual hose:

Gas is filled into the vehicles with the help of dispenser. This dual hose dispenser is
capable of handling two vehicles at a time.
There are various foreign manufacturers providing the CNG filling station equipment. In
this pre-feasibility report, a British origin compressor6 has been selected. This equipment
is selected because of its low electricity consumption, higher outlet pressure, low
maintenance, durable working, longer periods between overhauls and good market repute
and presence.
Personnel Requirement:
Manpower requirement for the CNG filling station includes manager, cashier, dispenser,
operators, accountant, watchman and sweeper. The total staff strength would be 13
persons for the two shifts. The staff salaries for year one are as follows:

Background of Enterprise:
Natural gas is nothing new. In fact, most of the natural gas that is brought out from under
the ground is millions and millions of years old. However, it was not until recently that
methods for obtaining this gas, bringing it to the surface, and putting it to use were
developed.
During most of the 19th century, natural gas was used almost exclusively as a source of
light. Without a pipeline infrastructure, it was difficult to transport the gas very far, or
into homes to be used for heating or cooking. Most of the natural gas produced in this era
was manufactured from coal, as opposed to transport from a well. Near the end of the
19th century, with the rise of electricity, natural gas lights were converted to electric
lights. This led producers of natural gas to look for new uses for their product.
In Pakistan:
CNG is abbreviation of Compressed Natural Gas. It is considered to be Environment
Clean. Natural Gas is widely used as a fuel in homes, industries and factories in Pakistan.
When we compress or pressurize the Natural Gas to 250 bar pressure then its called
CNG. CNG is made of methane CH4. Natural Gas or CNG consists of at least 85%
methane and 10% of nitrogen and carbon dioxide.
At the end of 2007 the CNG Industries of Pakistan has invested over Rs 70 billion during
the last few years as a result of encouraging policies of the government. Nowadays 2,700
CNG stations are operating in the country in 85 cities and towns, and 1000 more would
be setup in the next three years. It has provided employment to above 30,000 people
across the country.
According to the International Association for Natural Gas Vehicles, Pakistan has the
third-largest number of natural gas vehicles. Argentina and Brazil are the two countries

with the largest Consumption of CNG vehicles. As of 2005, Pakistan is the largest user of
CNG in Asia, and third largest in the world.
In March 2009 over 2 million vehicles converted to CNG, and the Ratio of 35% annually.
291678 Motor vehicles converted to CNG per Month. All Pakistan CNG Association
(APA) Sana-ur-Rehman confirms that CNG stakeholders have invested Rs.90 billion in
this sector and another Rs 20 billion investment is in pipeline. The CNG consumers had
invested around Rs 60 billion in converting their vehicles to CNG. CNG replace 6.12
billion liters of petrol every year and saved the foreign exchange by turning the of billion
of dollars.
Production Plan
Perquisites of CNG Station:
The process of opening up a CNG station includes few essential steps that need to be
followed in order to full fill the criteria of oil marketing company (OMC) as well as the
government.
Application:
An entrepreneur interested in franchisee business submits a written application
(expression of interest) to an oil marketing company (OMC). The applicant requests the
OMC to asses the feasibility of his land for the purpose of retailer ship of their petroleum
& lubricant products.
Feasibility Study:
After Initial survey OMC scrutinizes the applicant on the bases of his credibility (both
social and financial), & skills, and then a feasibility study is conducted by the OMC’s
expert to measure the viability of applicant’s land with respect to its location. After
fulfilling the feasibility criteria for the project the OMC signs a retailer ship agreement
with the applicant and acquire his land on rental lease for the period of minimum 15
years. The rent is just a nominal amount based on the location of the land.
No Objection Certificates (NOCs):

After signing the agreement the OMC’s architects draw a map for the sight representing
the anticipated structure of the sight as per the national standards. The application is then
submitted to the district coordinator officer (DCO) along with the map in order to acquire
a no objection certificates from the concerned departments for this project. The DCO
calls a consultative meeting including the representatives of the concerned departments to
critically analyze the project and share if they have some objections or not regarding the
project. With the view of all the representatives regarding the project the DCO issues a no
objection certificate for the prescribed project.
NOCs:
No Objection Certificate will be required from the following departments prior to the

commencement of the business:
• Concerned development authority of the city

• Traffic Engineering and Planning Authority (TEPA)
• Traffic Police (SSP)
• Department of Civil Defense
• National Highway Authority (NHA)
• Central Board of Revenue (CBR)
• Civil Administration-Tehsil Municipal Administration (TMA)
• Irrigation Department
• Forest Department
• Explosives Department
The cost associated for obtaining the above NOCs is estimated at Rs.100,000
License of Explosives:
The explosives department is a supreme authority for issuing a license to store or sale the
explosive (petroleum) items. The OMC finally submits the application to the department
of explosives for the grant of license. The application includes NOC and the sight map
issued and approved by the DCO respectively.
Construction phase:
After the permission of explosives department the infra structure construction is to be
started according to the approved map. The cost of infra structure is shared between the
entrepreneur and the OMC. The company totally pays for the machinery and equipment
and the civil work is the responsibility of entrepreneur. After the completion, the sight is
inspected by an expert engineer of OMC. The sight constructed according to the
standards qualifies for the certificate of “safety and completion” issued by the OMC’s
engineer.
Grant of License:
The last and final step is the sight inspection by the inspector of explosives from the
explosives department. The inspector critically inspects the site (specially the fuel storage
tanks) according to the pre defined rules of explosives department and grants the license
to the franchisee (entrepreneur) to start his business.


Natural Gas Processing:
Manufacturing Process Identification:
The natural gas inside the gas pipeline is between 2 and 60 bar. The compressor increase
this pressure up to 200/250 bar, according to the standards in each country. Once
compressed, CNG is stored in cylinders to guarantee refueling stations have permanent
pressure of gas ready to be sold. Dispensers are the devices that supply vehicles with
CNG fast and safely. Each dispenser has a pair of highly resistant flexible hosepipes to
fill two vehicles simultaneously.
The whole process is monitored by a control panel. This panel monitors alarms, controls
pressure, gas discharge from the compressor to the storage cylinders and the use of
dispensers. In addition, the panel can register all filling data for better sales control.

Name of Suppliers:
The Central Board of Revenue (CBR) has specified the list of compressors, storage
cylinders, CNG vehicle cylinders, CNG machinery & equipment and conversion kits in
SRO 38(1)/98. For the convenience of investor, a list of some of the available equipment
and machinery is given below:
Suppliers
Operational Plan
Operations performed in the Plant:

Compressors:
A gas compressor is a mechanical device that increases the pressure of a gas by reducing
its volume. Compressors are similar to pumps: both increase the pressure on a
liquid and both can transport the liquid through a pipe. As gases are compressible,
the compressor also reduces the volume of a gas. Liquids are relatively
incompressible, so the main action of a pump is to pressurize and transport liquids.
CNG is Compressed Natural Gas stored at high pressure of 250 bar. Natural gas is a gas
that comes from within the earth and consists of 85% methane, 10% nitrogen and
carbon dioxide, and the balance is ethane, propane, and butane. The octane rating
of natural gas is 130. One GGE of CNG has more energy than 1 gallon of gasoline
so the amount of CNG used is a little lower than that of gasoline. The octane rating
of natural gas is 120.
Compressor
MANOMETER:
Pressure indicator installed between the supply valve and pressure regulator to
permanently measure and show cylinder CNG pressure. The amount of gas in the
cylinder is in close relation to pressure, therefore the pressure gauge sends a signal and
indicates on the panel the amount of CNG available.
PRESSURE REGULATOR:

Regulates pressure of CNG to the engine and has different regulating stages. Through
these stages the cylinder pressure, varying according to consumption, is regulated to a
steady and unique pressure for the operation of the engine.
FILLING VALVE:
Multi-valve with quick closing supply device, that keeps CNG stored in the cylinder.
Through this valve the vehicle is refueled with CNG.
MIXER:
Controls the amount of CNG inside the engine, setting the ideal air/gas relation for good
operation.
ACTUATOR:
It is an essential part to improve the engine performance and reduce excessive
environmental consumption
ELECTRONIC UNIT:
It enables the automatic correction of the air/gas relation. It controls actuators and sensors
to improve the mixture.
CNG CYLINER:
Stores CNG, Faultless steel manufactured and prepared to operate with pressure levels
ranging from 200 kg/cm² to 250 kg/cm².
CYLINDER VALVE
Installed at the cylinder gas outlet with safety devices for over pressure and for a quick
closing.
VENTILATION SYSTEM:
Made up of safety equipment that allows the system to ventilate.
CONNECTION TUBES:
Hard high pressure tubes connect the CNG cylinder to the engine.
PRESSURE REGULATOR:
It regulates pressure of CNG to the engine and has different regulating stages. Through
these stages the cylinder pressure, varying according to consumption, is regulated to a
steady and unique pressure for the operation of the engine.
DISPLAY LEVEL OF COMBUSTIBLE SELECTION INDICATOR:

Operates combustible changes electrically from the interior of the vehicle. Indicates CNG
level available in the storage cylinder of the vehicle.
FILLING VALVE:
Multi-valve with quick closing supply device, that keeps CNG stored in the cylinder.
Through this valve the vehicle is refueled with CNG.

PRESSURE GAUGE:
It is a pressure indicator installed between the supply valve and pressure regulator to
permanently measure and show cylinder CNG pressure. The amount of gas in the
cylinder is in close relation to pressure, therefore the pressure gauge sends a signal and
indicates on the panel the amount of CNG available.
Technology Utilization:
Typical CNG Mother Station
TYPICAL DAUGHTER BOOSTER STATION
Organizational Plan

Form of Ownership:
The ownership of the venture will be of sole proprietorship or partnership depending

upon the amount of finance, as it is a sort of organization which is run by the private
people having sufficient finance to start this venture.
Nature of Business:
The nature of the venture will be of private limited as it does not involve the issuing of
prospectus for the purpose of calling for investment in the shares.
Identification of the Ownership:
The ownership of the business will be in the hands of the only entrepreneurer who is
going to start the venture in case of sole proprietorship & in the hands of all the partners
in case of partnership business.
Responsibilities of Employees:
• Fuelling the vehicles.

• Selling the lubricants.
• Counting and accepting the cash
• Operating the machinery
• Cash Management.
• Book Keeping
CNG Distribution Hierarchy

Marketing Plan
Mission & Vision:

Vision:
Goal to build around 100 standard stations in three to five major cities of the country by
the end of 2020.
Mission:
Adoption of high quality compressed natural gas for transportation fuel driven by
inherent environmental benefits, economic advantages, and strong government support
under high customization level for the people of Pakistan.
Situation Analysis:
In the situation analysis our focus will be on the environmental forces affecting this
particular venture & understanding other contaminating factors affecting this venture in
the society & then we will see that how can we minimize the impact of these factors.
These factors are as under:
Environmental Analysis:
General Overview:
Natural Gas is one of the most valuable natural resources abundantly available in our
country. The people of Pakistan have been using the petroleum products as a fuel in their
automobiles, thus spending a huge amount of foreign exchange on import of petroleum
products. Moreover, the Government of Pakistan has taken certain concrete steps in order
to promote the use of natural gas as a fuel substitute in the automobiles. Due to the efforts
made by the Government and comparatively low prices of gas, more than 600,000*
vehicles have already been converted to operate on Compressed Natural Gas (CNG)
fueling system all over Pakistan.
Due to high cost of petroleum products, lots of vehicles are switching over to CNG. At
present, there are more than 2700 CNG stations operating in the Country and this number
is insufficient to meet the rising demand of CNG in the coming years. The total project
cost for setting up the CNG filling stations has been estimated at Rs.31.13 million. It
includes land, building, CNG equipment and machinery, spares, along with the
preliminary expenses and working capital.
Compressed Natural Gas (CNG) is produced when the natural gas is compressed into
cylinders to be used as a fuel in the automobiles. The compressed natural gas has been
used as an automobile fuel since 1940, and over the years, the technology has been
modified and refined. In the recent years, the usage of CNG as an automobile fuel has
significantly increased because of its low cost and environment friendly nature.
Current Situation:

Natural gas presently accounts for the largest share of Pakistan’s energy use, amounting
to about 50% of total energy consumption. Pakistan currently consumes all the domestic
natural gas it produces. Over the past six years’ period, natural gas consumption in the
country has risen by an average annual rate of 10.4%, liquefied petroleum gas (LPG) by
17.6%, and coal by 22.8%. Despite a slight increase in production recently, Pakistan,
with its growing level of consumption will need to become an importer of natural gas in
the next three to five years, provided no major discoveries are executed. Consequently,
Pakistan is currently exploring several pipeline options (Iran-Pakistan-India,
Turkeministan-Afghanistan-Pakistan-India) and the import of liquefied natural gas from
Qatar, to meet the expected growth in demand for natural gas. Coal plays a minor role in
country’s energy mix, although Pakistan sits on one of the largest coal reserves estimated
at 185 billion tons in Thar in Southern Pakistan.
Pollution & waste management:
Recent studies have identified pollution caused by hazardous gas emissions and solid
waste as a key environmental issue confronting Pakistan, with significant health
implications.
Air Pollution
Air pollution in Pakistan is caused by industrial and thermal power plants, but more
particularly by vehicular emissions. As a result, the outdoor air quality in Pakistan’s
urban areas has deteriorated significantly. In 2001, concentrations of suspended
particulate matter in Lahore, Rawalpindi, and Islamabad were four to seven times higher
than levels recommended by the World Health Organization. Even higher levels of fine
particulate matter were measured in Gujranwala and Faisalabad in 2003 and in Quetta in
2006.
A substantial increase in the number of vehicles on urban roads continues to drive up
levels of urban air pollution. Common gases emitted by vehicles include carbon
monoxide, nitrous oxides, and ozone, and are dangerous to human health beyond certain
levels of concentration. Poly-aromatic hydrocarbons released by diesel-powered vehicles
are known carcinogens, while smoke from diesel engines has aggravated already elevated
levels of airborne soot. Nitrous oxides are emerging air pollutants with the highest
concentrations recorded in Karachi, followed by Lahore, Quetta, Peshawar, and
Islamabad (Figure 3). Industries located in urban areas are the main source of sulfur
dioxide (dangerous to human, animal, and plant life) while brick kilns powered by low-
grade coal are notable sources of soot.
Urban Air Pollution: Nitrogen Dioxide Concentrations in Pakistan’s Main Cities

PEST Analysis:
This analysis is a helpful way to understand the “big picture” of Political, Economic,
Socio-cultural and Technological environment. By making good use of PEST analysis, it
is ensured that what is going to be done is aligned positively with powerful forces of
change. It helps in operating in a new country or region and helps in understanding the
realities of that environment. It helps in strategy formation in a sense that these factors
(Uncontrollable environmental forces) must be kept in view, which may lead to failure if
ignored. The position of PEST analysis in understanding the overall picture of
environment can be described by the following diagram:
PEST Analysis Diagram
Political Environment:

Political environment, Government agencies and pressure groups have a strong influence
upon the activities of any organization in a society. Political environment strongly affects
the marketing decisions. The political stability of a country has its impact on the
consistency of policies of local government. Importance of public interest groups and
business regulations can be found from the political environment.
Nations vary greatly in their political and legal environment. Sometimes, a government
can decide violently to respond a popular feeling even without a change. Any new policy
can be introduced regarding tax and trade and tariff control etc. This may give benefits to
the organization but the thing matters is that how they handle business and financial
matters in such unexpected and sudden changes? Political trends may not be of as much
importance in stable governments as they are in weak ones, although they can have a
significant impact on business. For example, in the United States, the companies in the
business of providing social services can have more opportunities when Democrats are in
power. Political decisions like awarding of subsidies to any sector either directly in the
form of grants or through tax incentives can impact the industry circumstances.
Legal factors include the local rules, regulations and legislation prescribed by the
government of that country. Legal issues must be understood clearly and have great
importance in strategy formation. Legal environment is one of the main forces that give
informational inputs which must be factored into the decision-making process. All
business activities are directly related to changes in state and federal tax laws and these
changes are influenced by the local political and legal factors. Corruption is also a major
factor in many countries in which many political persons are involved. Organizations
have to face the problem of corruption as well.
Some important factors of political and legal environment can be listed as tax policies,
political stability, Employment laws, competition regulation and safety regulations etc.
Economic Environment:
Economy of a country plays a major role in the profitability and success of any sector and
organization in the parameters that how stable, good and growing is the economy of that
country. Economic environment consists of factors that affect consumer purchasing
power and spending patterns. Nearly all companies examine the economic environment
before strategic planning. Economic environment is usually analyzed by keeping in view
the following economic indicators: employment, consumer price index, housing starts,
personal income, saving rate, industrial production, capacity utilization and productivity
etc. Although the gap between living standards of well-developed Western and
developing Asian countries is lessening, yet the uncertain economic climate in the Asian
economies has important implications for international marketers. Organizations must
determine that how these changing incomes affect purchasing power and how they adopt
it for the firm’s profitability.

In general, following are some of the key factors which help in understanding the
economic environment of a country: information about economic growth, interest rates,
exchange rate, inflation rates, impact of globalization, unemployment and labor supply
and levels of disposable income and income distribution.
Socio-Cultural Environment:
During the formation of marketing strategies, companies have to look after a lot of
factors. Deep study of local culture and social setups is also one of the major factors
which account much in successful strategy formation. Varying types of consumer
behaviors are found in different cultures. The study of culture helps to understand the
consumer behavior and in turn assists firms to improve their marketing strategies by
understanding issues like:
• The way how consumers think, feel and select between different brands or
products.
• The psychology of how consumer is influenced by culture, family and social

setups.
Understanding of these issues helps to adopt better strategies by taking the consumer into
consideration. By understanding the consumer, firms will be able to make a more
informed decision as to which strategy to employ.
Each country has its own set of values and traditions. The companies must know that how
consumers in different countries think and use different products before planning a
marketing program. All the positive and negative impacts which a culture may cause
must be identified. There might be different dimensions of culture like the social
organization of society, religion, literacy levels, political systems and language.
Social factors also influence behavior of consumers. A person's family, friends and social
organizations strongly affect product and brand choices. The person's position within
each group can be defined in terms of role and status. A buyer chooses products and
brands that reflect his or her role and status.
“Cultural environment is made up of institutions and other forces that affect society’s
basic values, perceptions, preferences and behaviors.” People have their beliefs by living
in a particular society. These beliefs may be either core beliefs or secondary beliefs. Core
beliefs are inherited from parents, reinforced by religious groups, business and
government. These beliefs have a high degree of persistence. While secondary beliefs can
be changed more easily. Marketers have a chance of changing secondary values but it is
pretty difficult to change core values. So, Marketers should have a better understanding
of the cultural environment of the country before making any business strategy.

According to Professor Geert Hofstede, “Culture is more often a source of conflict than
of synergy. Cultural differences are a nuisance at best and often a disaster.” Management
is a process which is interconnected with many other parts of life and cannot be isolated
separately from what is happening in the society. It interacts with what happens in
politics, family, school, government and also related to the religion and local traditions.
“Cultural Dimensions Model” of professor Greet Hofstede presents a framework
describing five different dimensions of values between national cultures.
Power Distance
“The degree of inequality among people which the population of a country considers as
normal”
It means the difference of power and wealth among population of the country. All
societies are different with respect to this. But the level of gap in some countries is
greater as compared to other ones where it is smaller but it exists in all cultures and
societies. In cultures with large power distance, there is respect for old age and status is
important to show power.
According to Hofstede, Malaysia scores highest on power distance at 104, Pakistan

scores 55, whereas Sweden lies at 31 only.
Individualism verses Collectivism:
“The extent to which people feel they are supposed to be take care for or to be cared by
themselves, their families or organizations they belong to”
There are some societies in which individuals are loosely tied with each other and they
are supposed to take care of themselves and look after their immediate family only. On
the other hand, the societies which we can call collectivistic societies, the people in these
societies are integrated in strong groups and family relations (with uncle aunts and grand
parents). They take care of each other without any specific interest.
According to Hofstede, Pakistani culture is collectivistic whereas USA has individualistic

culture.
Masculinity verses Femininity:
“The extent to which a culture conducive to dominance, assertiveness and acquisition of

things versus a culture which is more conductive to people, feelings and the quality of
life”
The distribution of roles between the genders is another fundamental issue for any
society. In masculine societies, roles of genders are clearly distinct i.e. men are supposed

to be aggressive, tough and focused on material success, whereas women are supposed to
be modest and concerned with the quality of life. While, femininity are those societies
where role of genders overlap. It means both men and women are supposed to be tender,
modest and concerned with the quality of life.
Sweden, Norway and Denmark are feminine cultures whereas Pakistan has masculine
culture.
Uncertainty Avoidance
“The degree to which people in a country prefer structured over unstructured situations”
It deals with the society’s tolerance for unstructured and uncertain situations. It shows
that a culture programs its members to feel comfortable or uncomfortable in unstructured
situations. Unstructured situations are novel, surprising and different from usual.
Uncertainty avoiding cultures avoids such situations by strict rules, security measures and
religious believes in absolute truth. People belonging to such cultures are more emotional
and motivated. On the other hand, uncertainty accepting cultures are more open to
different kind of unstructured situations.
Singapore has a low uncertainty avoidance culture whereas Pakistan has a high
uncertainty avoidance culture.
Long Term verses Short Term Orientation
“Long term: values oriented towards the future, like saving and the persistence- short
term: values oriented towards the past and present, like respect for tradition and fulfilling
social obligations”
Long term oriented societies are characterized by persistence and thrift. Where as in short
term oriented cultures people are more concerned with the traditions and they have strong
social values.
Technological Environment:
Market place is changing radically as a result of advancements in technology. There are

three different aspects of technology: type of technology, its process, and the impetus for
its development. Type of technology preferred by a company is dedicated by its interest.
Technological environment may be the most dramatic force in changing the working
style and destiny of the firms. Technology is changing rapidly and every new technology
replaces an older one. New markets and opportunities are created by new technologies;
the marketers should watch these trends in technology in order to compete. Companies
which fail to anticipate and keep up with technological change find their products
outdated soon. Firms must track technological trends and determine that whether their
product is fulfilling the customer’s demands still or not. Some major factors of

technological environment may be R&D activity, automation, technology incentives, rate

of technological change, impact of emerging technologies, impact of internet and
reduction in communication costs. Marketers need to understand the new technologies
and the ways that how these technologies can be helpful to serve customers.
SWOT Analysis:
Strengths:
• Location of the project will play a pivotal role in the successful running of the
CNG station. The daily turnover of the cars largely depends on this important
factor.
• Selection of proper equipment is another key for carrying out the successful
operations of the proposed project. As we are importing equipment mostly from
abroad hence it will surely affect our performance positively.
Weaknesses:
• Lack of expertise might be our weak point.

• We are going to start a venture when there is prevailing a general shortfall of gas
supply in the country.
• We have currently no skilled workers for this venture that might be a challenge
for us.
Opportunities:
The proposed project would have a number of competitive advantages:
• The project will provide cheaper fuel to its customers compared to the petroleum
products which are already on the higher side.
• Government has exempted the imposition of sales tax and custom duties on the
import of CNG kits and CNG plant and equipment,
• HDIP, a non-profitable organization working under the umbrella of Ministry of
Petroleum and Natural Resources, provides consultancy services to the interested
parties for setting up the CNG filling stations.
Threats:
The proposed project will be facing the following threat:
• Market saturation over a longer period of time due to a large number of entrants.
• Threat of increase in the prices of the natural gas by the government.
Porter’s Five Forces Model

Marketing Objectives & Goals:

Goals for Next Ten Years:

Based on the survey of some CNG stations in R.Y.Khan, the number of cars assumed for
revenue projections is as follows.
So our goals & objectives for the next ten years are as under:
Detailed Projected Increase in Cars
Target Market:
The target customers for the proposed project would be the vehicles running on CNG
fuel.
Market Demand:
At present there are more than 3000000 vehicles, which have been converted to CNG
fuel, and a large number of vehicles are further being converted.
Due to the increasing prices of petroleum products, the trend of converting cars to CNG
fueling system has been on a rise. However, there exist a large number of people who
were reluctant to convert their vehicles from petrol to gas due to safety concerns.
recently, many car manufacturers have started manufacturing the cars with built-in CNG
fueling system. This change has led to enhancing the confidence in the minds of the
general public regarding the safety concerns, and now, more people are inclined towards
purchasing these factory-fitted CNG fueling system cars.
Market Supply:
Total number of CNG stations in Pakistan is only over 2700, which is quite low for
meeting the growing demand of CNG. Apart from these 2700 CNG stations, many new
CNG stations are being setup across the country.
Price Mechanism:

The final prices of CNG & LPG include value addition at different stages as given in the
table below:
Ex-depot Sale Price Build up Formula
The dealer or the owner of the fuelling station gets 4.0% commission for the fuel he sales
as explained in the table above.
Promotion Strategy:
Promotion is very important for selling any product or service in the market. We will use
following tools of promotion in order to market our services:
• Advertising through Cable T.V ads.
• By publishing pump lifts & placing banners at different places of the city.
• By sending Thanks letters to our loyal customers.
• By offering visiting cards to every customer who comes to our station.
• We will also hire two workers specifically for the purpose of promotion.
• We will organize seminars in order to provide useful suggestions to government

for enhancing energy resources in the country.
Financial Plan

This is the most important part of the business plan which will describe the level of
finance needed for this particular project, the sources of finance, & also covers the
utilization of the funds available to any entrepreneur in different areas for the
establishment of this CNG station. This step will cover the following heads:
Projected Cost

Projected Income Statement
Projected Balance Sheet

Projected Cash flow Statement

Revenues

Cost of Sales

Working Capital

Ratios Analysis

Break-Even Analysis

A minimum of 202 cars is required to be filled daily in order to operate at breakeven.

Considering the market trends and number of vehicles being converted into CNG fueling
system, initially the project would be able to attract and serve at-least 202 vehicles per
day.
BEQ= Fixed cost/ Sale price – Variable cost

= 202 Vehicles (Daily)
Risk Assessment

Following Risks are on the way to this venture:
Inflation Rate:
10% inflation rate has been considered while making the projections for cost of sales,
operational expenses and salaries. The prices for gas, electricity, operational expenses
and staff salaries are increased by 10% every year as a result of inflation. The selling
price of gas has been increased by 5% every year. This shows that revenue will increase
by less percentage than expenses in the earlier years.
High Depreciation Rate:

High depreciation rate of different assets will also be a risk for the venture that may
ultimately decrease the returns of the venture.
Depreciation Rates
Taxable Profit:
For the purpose of calculating taxable profit, depreciation is calculated on the rates as per
the Income Tax Law, which will also be a risk for us. These are as follows:
Tax Adjustments

Annexure





Zahid CNG Business Plan

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The Islamia University of Bahawalpur, Rahim Yar Khan Campus (DMS)

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constructive criticism and friendly discussion helped me to learn and enabled me to

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Name of the Business: Asian Tigers CNG Station

Statement of Needed Finance:

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This head covers the following aspects of the Business Plan.

• Manufacturing Process Identification.

• Venture’s Operations e.g Head Office, regional plants etc.

The organizational plan covers the following heads of discussions:

• Form of ownership. (Sole Proprietorship, Partnership,

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 Conducting the marketing research.

 Marketing Objectives & Goals.

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• What Risks are to taken?

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• Strong Government commitment to promote usage of

Future Outlook & Market Demand:

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The petroleum products account for approximately 40 percent of modern energy

Fluctuations in Demand of Petroleum Products

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Description of the Business:

Products & Services:

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A minimum of 202 cars is required to be filled daily in order to operate at breakeven.

OFFICE, Equipment, Personnel:

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The following equipment is required for a CNG filling station:

Electric Control Panel:

Priority Panel for Vehicle Priority:

CNG Dispenser high flow dual hose:

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No Objection Certificates (NOCs):

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commencement of the business:

• Concerned development authority of the city

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Natural Gas Processing:

Manufacturing Process Identification:

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Operations performed in the Plant:

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DISPLAY LEVEL OF COMBUSTIBLE SELECTION INDICATOR:

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Typical CNG Mother Station

TYPICAL DAUGHTER BOOSTER STATION

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The ownership of the venture will be of sole proprietorship or partnership depending

Identification of the Ownership:

• Fuelling the vehicles.

CNG Distribution Hierarchy

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