Despite the harsh reality of current operational environment, Nigeria’s biggest RoRo port operator, PTML is navigating the odds. In this interview with SAMSON ECHENIM, the company’s managing director and chief executive officer, Mr Asconio Russo, speaks on the dwindling vehicle import market and how the automotive policy contributed to this slowdown of activities, among others.
How would you describe your business progress at the moment?
Grimaldi is the biggest RoRo operator in Africa and among the biggest in the world and here in Nigeria, Grimaldi invests in private terminal and that is PTML. PTML (Ports and Terminal Multiservices Limited) is the only build, operate and transfer (BOT) terminal in Nigeria. This means that it was built from the scratch, so it different from any other concessionaire. We didn’t take over Nigerian Ports Authority (NPA) existing facilities but we built a completely new terminal. So, today we are still the biggest terminal here in Nigeria receiving vehicles and we have been succeeding so far. Of course the challenges, which we have been having in the last couple of years, have to do with the some policies which have affected importation of vehicles. So now, as a result of that we are experiencing significant slowdown of activities.
Well, the situation now does not only affect us but the whole terminals which are involved in RoRo. I will say the business is down by about 60 per cent. So, it is a significant drop and this has to do with auto policy which saw the increase of duties on imported cars and buses and this started in July 2014 when the level of duties on vehicles were increased significantly. As a result of that there was huge diversion of traffic to Benin Republic. Benin Republic has always been one of the major conduits for loss of imported vehiclesrevenue in Nigeria, but after this policy was introduced, it became the most important port for Nigeria for vehicles. This has consequences in terms of loss of jobs and revenue for the government, which we have quantified. We did an exercise several months ago and we quantified over N300 billion lost by government in terms of duties and levies that would have been collected by Customs and other agencies of government and that was the exercise we did about four months ago.
I think with the current exchange rate, it is more than that and could be up to N400 billion. So it is a huge loss in terms of revenue to the government and it’s a huge loss also in terms of cost of living, because at the end of the day, these vehicles are paid for by Nigerians and they are more expensive, so, at the end of it, it is Nigerians who are going to pay the bills. Nigerians are even forced to buy cheaper vehicles, because they cannot afford to buy vehicles with high level of duty. That is why these days; you see many old vehicles coming to the port, including old trucks. But at Grimaldi we don’t accept salvaged vehicles, which meanaccidented vehicles. But we do know in the port that there are a number of carriers bringing accidentedvehicles. So a vehicle that is like 15 years old, completely damaged and then they still bring them here in Nigeria and fix and then put them on the road. The negative impacts are in terms of pollution, accident and breakdown, among others. So these are caused by the policy.
What is current figure of imported vehicles in Nigeria?
Before the new duty regime was implemented, there were about 30,000 new cars and trucks arriving Nigeria every month at the RoRo terminals, but now we have about 10,000. This is the kind of drop in the market. So, from 30,000 to 10,000 units is like two-third of the market just disappeared. So you can imagine what it means in terms of revenue loss, not only for us, because we are a minor player in the whole market. It means loss of revenue for Customs, for NIMASA, for NPA, for FIRS and all the activities linked to importation of vehicles which are engaged, including transport, trading and so on. So we are talking about a huge loss here.
One expects that the auto policy would create another form of market for terminal operators as the local manufacturing firms bring in their semi-knock down parts through the ports. So, are Nigerian automobile manufacturers not patronizing Nigerian ports?
So far, there’s no official published figure about the number of vehicles assembled in Nigeria, but I believe that they are not any significant number. Anyway, the market for new vehicles in Nigeria is very small. The whole vehicle market in Nigeria was estimated to be like 700,000 vehicles per year before the crisis between Lagos and Cotonou, but out of this number, only 50,000 vehicles were new and that was before the introduction of the auto policy and this is a small market and that was before the crisis. This year, up to July, only 3000 new cars have arrived Nigeria, not because they are being produced here, but just because there is no money to pay for these new cars. The main market is really the used cars, that is why the local assemblers are not really assembling cars because nobody can really afford the cars because even the cars assembled in Nigeria are equally costly, reaching an average of N5 million or N6 million, but the number of people that can afford to pay this money for a car is very limited. Now it is even worse.
In view of the negative impact of the auto policy on your business and the current economic difficulties, is PTML looking at other areas of investment in Nigeria?
Yes, at PTML, we have always been handling not only vehicles, but also containers and general cargoes and this year, we are focusing more on general cargoes. The problem is that, the economy is in recession now, so it is very difficult to attract new business when everyone else around you is also suffering and trying to attract new business as well, so the focus for now is more about streamlining our operations and in view of this time, we are also looking at other opportunities, but we are still at very preliminary stage now, so I don’t want to mention those ones now, but we are considering other ventures.
Recently, one of the terminal operators started RoRo operation and there have been reports that the operator may not have the licence to function as a RoRo port from the NPA. What is your reaction to this?
Yes, I think they received their first ship sometime in August, but I’m not too sure about their terms of concession. I know that they were handling mainly containers before and to an extent, general cargo. Honestly, I don’t have anything against new entrants coming into the market if their concession agreement allows them to do so. For us we are very confident about the product and services we are offering, so we are not afraid of competition.We welcome any new comer in the market and I think it is even positive that new competitors are coming, provided that their concession agreement allows them to do so. I know you are referring to Sifax; they are also my friend, so I don’t see that as a threat to our business, but of course we want the rule of law to be respected and there should be a provision in their contractual agreement that entitles them to run a RoRo port.
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