FG loses N400bn revenue on imported vehicles

Amidst economic crunch and desperate efforts to beef up income by the federal government, indications have emerged that relevant agencies of government may have lost a whopping N400 billion to the national automotive policy which restricts importation of cars and buses into the country.

Since the implementation of the 70 per cent duty and levy payments on imported fully built cars in 2015, operators of RoRo ports in the country have been lamenting that the figures of imported vehicles were plummeting, with some of them technically closing shops.

The managing director and chief executive officer of Nigeria’s biggest RoRo terminal, Ports and Terminal Multiservices Limited (PTML), Ascanio Russo told SHIPS & PORTS DAILY in an exclusive interview that the annual vehicular importation through the country’s ports now stands at only 10,000 units, down from the average figure of 30,000 new vehicles.

Before the revival of the auto policy in October 2103, about 700,000 used and new vehicles were imported into Nigeria annually, with the new vehicle figure standing at 50,000 units.

But now, Russo said the number of vehicles imported through Nigerian ports has gone down by 60 per cent, as more vehicles imported by Nigerians are destined to the Port of Cotonou.

He also said Nigerians now import older vehicles, as their buying power wane, doubled with the high rate of tariffs paid on the imported vehicles. This amounts to several other risks, such as a polluted environment, increased cost of maintenance and cost of living as well as increased cost of purchasing cars.

He said, “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 for all the activities linked to importation of vehicles which are engaged, including such other economies as transport, trading and so on. So we are talking about a huge loss here.

“This also has consequences in terms of loses of job and revenue for the government, which we have been able to quantify. We did an exercise several months ago and we quantified that over N300 billion was lost by the government as a result of the huge reduction in the imported vehicles market 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 bought by Nigerians at more expensive rates. So, at the end of it, it is Nigerians who are going to pay the bills and they are even forced to buy cheaper vehicles, because they cannot afford to pay the high level of duties.

“That is why these days, you see many old vehicles coming to the port, There a lot of old trucks coming in. But at Grimaldi we don’t accept salvaged vehicles, which means accident vehicles, but we know in the port there are a number of carriers bringing in accidented vehicles. So a vehicle that is like 15 years old, completely damaged are brought here in Nigeria and are put on the road. The negative impact comes in terms of pollution, accident and breakdown, among others. So, these are caused by the (auto) policy.”

He noted that since July 2014, when the first phase of implementation of a new tariff regime on imported vehicle began, there has been a significantly progressive drop in vehicular importation into Nigeria through the ports.

“As a result of that there was huge diversion of traffic to Benin Republic. Benin Republic has always been one of the major conduit for vehicles in Nigeria, but after this policy was introduced, it became the most important port for Nigeria for vehicles,” he observed.

Russo said the local automotive industry failed because, the cars being assembled by them remained costly, being new cars and beyond the reach of an average Nigerian.

“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,” he said.

 



Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.

..