Business

Vehicle Importation Drops By 40% As Clearing Charges Skyrocket, Dealers Lament

Published

1 year ago

November 20, 2022

Editor

There was a drop of about 40 per cent in the number of imported vehicles that came into the country between January and October this year through the Ports & Terminal Multipurpose Limited compared to the figure for the same period of the previous year.

While a total of 192,287 units of vehicles came into Nigeria in the first 10 months of 2021, only 114,159 units were imported through the same terminal in the same period in 2022. The terminal is responsible for the importation of most vehicles coming Nigeria.

A document obtained exclusively by our correspondent from the Customs Public Relations Officer in charge of the PTML terminal, Muhammad Yakubu, showed that from January to October 2022, only 122 vessels berthed at the ports as against 167 vessels recorded within the same period in the previous year.

The document also showed that the terminal recorded a total number of 30,560 containers in the first 10 months of 2021 as against 24,181 recorded in a similar period of the current fiscal year. These figures showed a serious drop in activities in the terminal, which is known to be a Roll-On-Roll-Off terminal in Nigeria where almost 85 per cent imported vehicles coming into the country come through.

Clearing agents operating at the nation’s maritime industry have blamed inconsistent government policies and the newly introduced Vehicles Identification Number for clearing of imported vehicles as reasons behind the decrease.

The PTML chapter Chairman of the National Association of Government Approved Freight Forwarders, Mr Thomas Alor, also blamed the levy imposed on imported cars by the government for the decline, adding that the VIN was not giving them the value they paid for.

He said, “The levy, which they imposed on imported used cars, is what is affecting car importation. What is causing the drop in importation of vehicles is the value in clearance. The VIN valuation is not giving us the value, which we are paying now.

“What made the value high is because of the levy imposed on older vehicles; it is the reason for the high cost of clearance of those vehicles. When we started the VIN valuation, we were paying normal duty with the percentage of the duty until the government now imposed levies on old vehicles, which now increased the prices.”

Though he admitted that the levy had been there before now, Alor, however, said it was not up to five per cent as against the 15 per cent the clearing agents were now being asked to pay.

He stated, “The levy has been there but it was below five per cent, but now, it is about 15 per cent. Any time we engage the Customs on the issue of value, they tell us that we requested for the VIN. And we are saying yes, we requested for the VIN, but the VIN was not well articulated the way we asked them to do it; they later imposed levies on it and the high levy is bringing the value up.

“Now, some vessels come with only 45 vehicles; some even come with less than that. The only time that they recorded a huge import of vehicles here was like two or three vessels that came with damaged vehicles. Following the introduction of the VIN and levy, vehicle importation has dropped drastically. There are times here at the PTML when nothing is happening and people just play around here. Some vehicles come through other terminals as containerised cargoes.”

A former Chairman of NAGAFF, PTML chapter, George Okafor, said the reduction in importation was more than 40 per cent.

Okafor stated, “It is no longer news that we have almost 61per cent reduction in importation of vehicles, it is very clear and open, it is an open fact and it is caused by policies. The VReg (Vehicle Registration System) is causing problems; as I am talking to you now, to get VReg is hard and without it you can’t access anything. So, all these are making things difficult for clearing of cargoes and vehicles out of the ports; it is not a hidden thing.

“We are in a situation where a ship will come and will deliver almost everything in Cotonou and the little one we have here will be difficult to clear.”

He said smaller vehicles that cost about N500,000 to clear now required over N1m, which was responsible for the high cost of cars in the market.

Okafor added, “The VIN is still affecting us because the values of some of the vehicles are high. You know Nigerians rely so much on older vehicles because they are cheaper. Most rich Nigerians go for higher vehicles, you know in Nigeria it is either you belong to the higher class or the lower class. And those in the higher class buy vehicles from 2018 upwards and they can afford to clear them, but the lower class relies so much on older vehicles. And those older vehicles now are very expensive to clear; the vehicles we used to clear with N500,000 or N600,000 are now from N1m upwards.

“The cheapest vehicle like Toyota Corolla is now very expensive to clear. So, after calculating the cost of purchase, shipping and clearing here in Nigeria, you will find out that the car will be very expensive for someone in the middle class to buy. And the car will hang because you are paying the same thing with what a 2014 model of the same car is paying, so it will be difficult to buy.

“So, the people who are importing these cars are not even keen again to do the business; if they bring in the vehicles, a lot of people may not have the money to buy the cars. If you go to the PTML in Mile 2, there is almost no one there, because that is where all these small vehicles come through and TinCan is where the executive vehicles come through. So, you can see how it is affecting the whole thing.”

The PTML chapter Chairman of the National Council of Managing Directors of Licensed Customs Agents, Abayomi Duyile, said, “The VIN and the 30 per cent levy are the causes of the whole problem. You know when they introduced the VIN, it was part of what we were saying before that it was going to cause problems, but the Customs introduced it saying that it would make their job faster and all that. About a month after they introduced the VIN, they came with a 30 per cent National Automotive Council contribution, and we protested, they now removed it and changed it to a levy.”

“So with all these things, you find out that over N2m has been added to the prices of vehicles. And when (former President Olusegun) Obasanjo was there, they allowed vehicles of 15 years old to come in, but now the Customs, in their own wisdom, said such were old vehicles. Now, for example, a 2008 model car has now been classified along with a 2013 vehicle in terms of duty payment.

“So, when you bring in a 2008 model of a vehicle and you are paying duty for a 2014 model, it will be very expensive. So, when you clear a 2008 modelled vehicle as 2013 or 2014 in Nigeria, you may go bankrupt, because there is no way you can sell such a vehicle when cheaply you clear at the rate of 2014; that is why you see the drop at the PTML.

“These are the two major issues when you say 2005, 2006 and 2009 vehicle importers should pay the same duty as 2013, it is not done anywhere else in the world. So, you can imagine the people that the system has affected, some of their vehicles are still in the port as we speak; some have also abandoned their vehicles because already there is no point wasting money to clear a vehicle you can’t sell. The ones that have been cleared take time to sell.”

Dealers lament

Meanwhile, car dealers have lamented a serious drop in patronage as cars now seem to be above the reach of ordinary Nigerians.

A car dealer at the popular Berger Automobile Market, Lagos, who gave his name as Chinonso Stainless, told PUNCH that most of the dealers hardly record any customer in months as against what they used to see, especially when the Christmas season was approaching.

He said, “My brother, there is nothing happening here again because of the high duty rate; people who are bringing in cars are not many again. So, there are fewer cars in the market and the prices are very high; the turn up of buyers is very low. The patronage is not the way it used to be, people hardly buy cars now.

“A 2003 Toyota Corolla that used to sell for N2.5m is now N3.5m, while the 2010 model of the same car is N4.8m. So, we are pleading with the government to bring down the duty on cars because as soon as the duty comes down, the prices will definitely come down.”

Another dealer, John Paul, said, “People now prefer to buy Nigerian used cars now instead of foreign used cars; even so, the Nigerian used car is also very expensive. You hardly see a clean Nigerian used car that is less than N1.5m; that is how expensive cars are now.”

The President, Association of Motor Dealers of Nigeria, Metch Nnadiekwe, did not take his calls as of the time of filing this report.
PUNCH

Business

Tinubu Okays Payment Of N3.3tn Power Sector Debts, Gencos, Gas Producers To Get N1.3tn, $1.3bn

Published

2 days ago

May 17, 2024

Editor

As part of the measures to tackle incessant power outages in the country, President Bola Tinubu has approved the gradual payments of power sector debts estimated at over N3.3tn.

Consequently, about N1.3tn owed power generating companies by the Federal Government will be paid via cash injections and promissory notes, while about $1.3bn (N1.994tn using the current official closing rate) owed to gas companies will be paid via cash and future royalties.

Already, the Federal Government has commenced payment of the cash part of the N1.3tn debt owed Gencos and concluded plans to settle the second part via promissory notes within a timeframe ranging from two to five years.

The Minister of Power, Chief Adebayo Adelabu, disclosed this at the 8th Africa Energy Marketplace held on Thursday in Abuja.

The event was themed, “Towards Nigeria ‘s Sustainable Energy Future: Policy, Regulation and Investment – A Policy Dialogue for the National Integrated Electricity Policy and Strategic Implementation Plan.”

The government is subsidising electricity by shouldering the gas payment component for power generation.

But over the years this payment has not been steady, leading to humongous gas debts as well as indebtedness to power generation companies.

Disclosing the solution to the issue, Adelabu stated that Tinubu had directed the Minister of Finance to make immediate payment of N130bn from the Gas Stabilisation Fund, being part of the N1.3tn owed Gencos. The rest will be spread over some time.

The power minister further explained that the payment of $1.3bn legacy debts owed gas producers would be sourced from future royalties and income streams in the gas sub-sector, a solution deemed satisfactory by the gas-supplying companies.

He said, “It is true that I mentioned that Mr President has approved the submission of the Hon. Minister of State Petroleum (Gas) to defray the outstanding debts owed to the gas supplying companies to the power sector operators.

“The payments will be in parts. We have the legacy debt and we have the current debt. For the current debt, approval has been given for a cash payment of about N130bn from the Gas Stabilisation Fund, which the Federal Ministry of Finance will pay, if not already paid.

“The payment for the legacy debts is going to be made from future royalties and streams of income in the gas sub-sector which is quite satisfactory to the gas supply companies. The last amount that was being quoted was $1.3bn, which we believe will go a long way to encourage these gas companies to enter into firm supplying contracts with the power generating companies.”

He further explained, “The situation we are in now is on a best endeavour model, which means there is no firm contract between the gas companies and the majority of the power generating companies. The day they can supply gas, they will, the day they cannot supply gas, there is no penalty. But once there is a firm contract they will be under contractual obligations to supply gas to these power-generating companies so that we can have a consistent power generation.

“So, that is the situation and the model we want to adopt for the gas segment of the power sector value chain.”

Continuing, the minister voiced concerns about the lack of policy coordination in the power sector, assuring the sector however that the current administration was committed to eliminating all bottlenecks in the industry.

Adelabu also justified the Band A tariff hike, saying that only 15 per cent of Nigerians were affected.

He disclosed that without proper billing, the power reform agenda of the present administration might not be achieved.

The minister also revealed that with the generation of 700MW from the Zungeru hydroelectric power plant, the Nigerian Electricity Supply Industry has recorded a new feat of 5,000MW.

Regarding the power-generating companies, he noted that the president had approved cash injections and promissory notes, providing significant encouragement to the companies and incentivising them to further invest in generation capacity.

The minister explained, “For the power generating companies, the debt is put at N1.3tn. I can also tell you that we have the consent of Mr. President to pay on the condition of settling the reconciliation of these debts between the government and the power-generating companies.

“And this, we have successfully done, and it is being signed off by both parties now. The majority have signed off, and we are engaging others to ensure we have a 100 per cent sign-off from the power-generating companies. And the modalities for paying this will be in two ways. Of course, there will be a cash injection, immediate cash injection.”

He added, “Government is not buoyant enough to pay down N1.3tn once and for all in terms of cash. But there is a fraction of it that will be paid in cash while the remaining fraction will be settled through a guaranteed debt instrument, preferably a promissory note. That is more like a comfort to these companies that in the next two, three to five years, the government is ready to defray this debt finally. This will go a long way to encourage the power generating companies to incentivise them to even invest more in generation so that you can know our generating output from the level it is now to a higher level because as I mentioned, there is an opportunity for demand locally and across the border. And that is a source of foreign exchange earnings for the country.”

Adelabu, who said the supply of electricity had increased due to the implementation of the Electricity Act 2023 and the Band A tariff, added that the Discos were requesting more load for onward distribution to their customers.

The power minister had stated in February that Nigeria must begin to move towards a cost-effective tariff model, as he revealed that the country was indebted to the tune of N1.3tn to electricity generating companies, while the debt to gas companies was $1.3bn at the time.

On March 1, 2024, The PUNCH reported that the Federal Government had paid $120m out of the $1.3bn indebtedness to gas companies for the supply of gas to run gas-fired power plants across the country.

Nigeria is currently suffering from low power supply because gas supply has been reduced after some operators stopped supplying the commodity to power-generating companies due to the indebtedness of the Gencos to gas-producing firms.

Adelabu recently revealed that the crash in power generation and attendant poor supply in January was because gas suppliers stopped supplying gas for the generation of electricity due to the indebtedness of the sector to gas producers.

Nigeria gets more than 70 per cent of its electricity from thermal power plants that run on gas. The remaining amount of electricity comes from hydropower-generating plants.

Speaking at the 7th Nigeria International Energy Summit in Abuja in March, the Director, Decade of Gas Secretariat, Ed Ubong, expressed excitement that the Federal Government had cleared $120m out of the $1.3bn gas debts.

The Decade of Gas Secretariat is under the Federal Ministry of Petroleum Resources (Gas). The Federal Government is subsidising electricity by paying for the gas used in generating power, as Nigerian power users are currently not paying the exact amount for electricity.

“As of last year, that (gas debts) was about $1.3bn, depending on how you add up the numbers. But I am pleased that between October and the end of January, the government has paid over $120m to offset some of that money,” Ubong stated.

Meanwhile, the African Development Bank is set to seek board approval for a $1bn policy-based operation with a significant energy component to support the reforms initiated by the new Electricity Act, of 2023. This funding aims to actualise the outcomes expected from the NIEP-SIP and attract sustainable investments.

The Vice President, Power, Energy, Climate and Green Growth Complex at the AfDB, Dr. Kevin K. Kariuki, disclosed this at the African Energy Market Place held in Abuja on Thursday.

The AEMP special edition focuses on the “National Integrated Electricity Policy and Strategic Implementation Plan,” reflecting the Federal Government of Nigeria’s ongoing reforms to enhance the power sector’s effectiveness, efficiency, and productivity.

Kariuki emphasised the alignment of the event with the bank’s “Light Up and Power Africa” initiative, which is part of its High 5 development strategy for the continent.

With Nigeria holding the highest electricity access deficit globally, the success of the reforms, including tariff adjustments and regulatory improvements, is crucial.

Kariuki highlighted the need to utilise over 13,000,000MW of installed capacity, improve transmission, reduce supply interruptions, and achieve financial viability across the power sector.

The VP noted that the success of the Electricity Act would hinge on its ability to rapidly provide quality electricity access to all Nigerians, thereby addressing the country’s status as having the world’s highest electricity access deficit.

“With 90m Nigerians lacking electricity, the reforms are poised to utilize over 13 Gigawatt of installed capacity, improve transmission, reduce supply interruptions, and enhance the financial viability of the power sector.

“No economy can grow in the dark,” the VP stated, emphasising the critical role of reliable power in economic growth, industrialisation, and competitiveness.

The AfDB’s investments include the $256.2m Nigeria Transmission Expansion Project and the $200m Nigeria Electrification Project, which will construct transmission lines, substations, and mini-grids.

Furthermore, the AfDB is financing a study to explore the deployment of Battery Energy Storage Systems to stabilise the grid and promote renewable energy.

Nigeria’s participation in the $20bn Desert to Power initiative to generate 10,000MW of solar power in the Sahel region, was also mentioned as a key step toward increasing renewable energy in the country.

The AfDB boss expressed confidence that the AfDB’s multi-faceted approach, including policy support, infrastructure financing, and capacity building, would ensure a viable and sustainable power sector in Nigeria.

He called for a collaborative spirit among governments, the private sector, and partners to craft policy recommendations that would lead Nigeria to universal access by 2030 and zero carbon emissions by 2060.

Obi, Nnaji speak

Meanwhile, a former Minister of Power, Barth Nnaji, and the presidential candidate of the Labour Party in the 2023 general election, Peter Obi, have advised the Federal Government to declare an emergency in the power sector.

The duo spoke at the inaugural Dele Momodu Leadership Lecture held Thursday at the Nigerian Institute of International Affairs, Lagos.

Nnaji also called a super grid to end the incessant collapse of the national power grid.

Nnaji, who was the Guest Speaker at the event, said the current national grid kept collapsing because it was not well structured.

Recall that the national grid collapsed more than two times in the first quarter of 2024, plunging Nigerians into darkness.

Touching on the theme, ‘Politics of Energy: The Way Forward’, Nnaji stated that the power ministry under his watch had years ago sought the approval of the Federal Executive Council to build what he called a super grid, a 765KV network that would rise above the existing 330 KV.

According to him, the 765KV is large enough to take power from high-capacity plants like the Manbilla Power Plant.

He revealed that the country has yet to have a transmission network that could wheel power from Manbilla when completed.

Nnaji explained, “Another critical area in Nigeria’s power sector is the transmission network. I believe that having the national grid the way we have it still going to be a problem. First, it is not robust, and it is not well structured. My advocacy is for multiple grids, autonomous but connected to the national grid. So that the national grid still operates, and will be more robust. It will begin to cure the regular incident of the failure of the national grid.

“When I was in government, we asked the Federal Executive Council to approve what we called a super grid, a 765KV network that will kind of rise above the existing 330KV network. Right now, Nigeria has 330KV and 132KV, but none of them is robust. But the 765KV network will be very important to take power from power plants such as the Manbilla that has been on for a while. Over 10,000 megawatts of power will come from Manbilla. So, the question is, which transmission infrastructure will take that power suppose that we finish it now? We need a super grid to take that power so that Nigeria can take power from various plants and transmit it to wherever we want it.”

The Chairman of Geometric Power commended Adelabu for reviving the super grid project.

“I am happy that the current Minister of Power, Adebayo Adelabu is reviving this super grid, and I think we have to spot him on that because it is a very important project. Our conception was that it would be done in sections by various companies so that it would not be one of these white elephant projects,” he said.

Nnaji expressed concern that still suffers gas shortages in the power sector despite its abundant natural gas reserves.

He wondered why the nation keeps exporting gas that is not yet enough for domestic use, calling for a state of emergency in the gas sector.

“A state of emergency needs to be declared in the gas sector. The declaration will save the power sector and allow the government and other stakeholders to address fundamental issues in the gas sector in a robust manner. The issue will include how to strike a healthy balance between producing gas for export and gas for domestic consumption,” he noted.

The former minister regretted that the Federal Government has not executed a power project since almost nine years ago, adding that some ongoing ones were abandoned by successive administrations.

“The development of the power sector has also been stalled for years because of the suspension of what we developed that time called partial risk guarantee to support power purchase agreement. A government that is buying power has to issue a power purchase agreement to the producer of power, and the agreement must be guaranteed.

“We were able to do this but only one project was completed, that is the Azura-Edo project, a 461MW power plant; and then it was stopped nine years ago. The outcome is that for this period, Nigeria has not commissioned a government-sponsored power project. And the former President of Ghana said you need to be adding over 12 per cent of energy to your country yearly. If you want to grow the economy, that’s what you need. If in nine years, we have not added anything, you can imagine. I want to tell you that because of that partial risk guarantee, four or five major projects had been fully developed but stopped. I encourage the government to reawaken those projects. They are very critical,” Nnaji added.

Earlier in his speech, former Ghanaian President, John Mahama, disclosed that Ghana had been able to power generation capacity to 5454MW, saying the country had been exporting electricity to other neighbouring countries in the West of Africa like Togo, Benin Republic and others.

Mahama remarked that Nigeria could achieve energy security for itself and other African countries, adding that a nation must plan because the energy demand will keep rising by 10 per cent yearly.

On energy transition, Mahama urged African leaders to decide their modalities with Nigeria showing leadership.

Speaking, the presidential candidate of the Labour Party, Peter Obi, posited, “When the former president of Ghana said they are generating and distributing 5,000MW, I was wondering; Ghana with one-seventh of our population generates and distributes more than us. We must declare an emergency in power. The way to go is very simple, we need embedded power, with gas supply. We have gas all over the place. Yes, we need the dollars, but I think making Nigeria more productive and pulling our people out of poverty, especially in the north, will give us far more value and dollars than focusing on exports. I think it is time to declare an emergency. We should encourage an embedded power”.

The organiser of the lecture and publisher of Ovation Magazine, Dele Momodu, maintained that Nigerians pay for electricity without getting the same being delivered to their homes.

In his welcome address, the veteran journalist wondered why the electricity challenges in Nigeria have defied all solutions.

“Why can’t we stop this endless energy crisis in Nigeria? We pay for electricity, but it can’t be delivered. The more we pay, the less we get,” he said.

Momodu lamented that the humongous money invested in the power sector over the years has not yielded any result.

This, he stated, informed his decision to organise the public lecture in commemoration of his 64th birthday.

Others at the lecture were Governor Ademola Adeleke of Osun State; former Governor Rabiu Kwankwanso of Kano State; former Governor Donald Duke of Cross River; the Ooni of Ife, Oba Adeyeye Ogunwusi and others.
PUNCH

Business

Naira Slumps, Exchanges At Over N1,500 Against Dollar

Published

5 days ago

May 13, 2024

Editor

The naira continued its depreciation against the US dollar in the foreign exchange market.

Data from the parallel market section and FMDQ showed further depreciation against the dollar on Monday.

At the parallel market, a Bureau De Change operator in Wuse Zone 4, Mistila Dayyabu, told DAILY POST that the naira was sold as high as N1,517 per dollar on Monday before settling at N1,500 per dollar.

“On Monday morning, the dollar was sold at N1,517 per dollar. However, on hearing the information about the coming of the Economic and Financial Crimes Commission operatives, we started selling at N1,500 this evening, ” he said.

The figure increased from the N1, 450 per dollar it traded at the weekend.

Similarly, at the official market, FMDQ data showed that they dipped to N1478.11 per dollar on Monday from N1466.31 last Friday.

This represents an N11.8 drop from the N1466.31 recorded last Friday.

Earlier, the Central Bank of Nigeria Governor, Olayemi Cardoso, said the apex bank’s Monetary Policy Committee will do everything to bring down soaring Nigeria’s inflation, which stood at 33.22 per cent in March 2024.

Business

CAC Opens Centre For Registration Of PoS Operators

Published

1 week ago

May 9, 2024

Editor

The Corporate Affairs Commission has inaugurated a centre for bulk registration of Point of Sale operators in its database.

The CAC Registrar-General, Hussaini Magaji, said this while inaugurating the centre stationed at its Federal Capital Territory Office in Abuja on Wednesday.

According to Magaji, the importance of registering the PoS operators in the commission’s database cannot be over emphasised.

He said the centre was well equipped with all the necessary facilities to operate 24 hours a day and ensure the commission’s achievement of its purpose.

“What we did was accommodate the request from the Fintechs.

“We have allowed them to integrate with the Corporate Affairs Commission; they have developed their structure, and we gave them access.

“Once they supply the necessary details for registration on their platform, the certificate is generally generated and transmitted directly to their platform without them having to contact anyone.

“We have done this to ensure that everyone gets it easy without hitches, but if they choose to apply manually, we have a secretariat open for them to do so,” he stated.

Recall that the Federal Government through the CAC on Tuesday issued a two-month registration deadline to Point of Sales companies, to register their agents, merchants, and individuals with the commission in line with legal requirements and the directives of the Central Bank of Nigeria.

Meanwhile, at the event, the registrar-general reiterated that the centre would be opened to all operators in the fintech industry who voluntarily submitted their agents and merchants for regularisation with the CAC.

Magaji said that the registration was in line with President Bola Tinubu’s desire to ensure financial inclusion for the youth and strengthen the fight against fraud, finance and other crimes in the country.

He further expressed his resolve to ensure compliance with the provisions of Section 863 (1) of the Companies and Allied Matters, CAMA 2020, and the CBN guidelines for Agent Banking, 2013.

On security, the CAC boss said that if a crime were committed using the PoS, the government would easily trace the perpetrators to the CAC data platform if such machines were registered.

“If an incident happens and they report it to CAC, if we do not have the operator’s details, we cannot respond, and that is the essence of this registration.

“The registration ensures that every detail of the person is provided, including NIN, passport photograph and all other useful documents.

“And it is an opportunity for more people to be captured into the formal sector,” he said.

The News Agency of Nigeria reports that the Special Adviser to the President on ICT Development and Innovation, Tokoni Peter attended the event.

The event was attended by Dr Salihu Dasuki, the Special Adviser to the President on ICT Policy Office, the PoS operators, and other stakeholders.

(NAN)