Nigeria: With Over 100% Hike in Operational Costs, Truck Owners Say Transport Business Collapsing

Abuja — The Nigerian Association of Road Transport Owners (NARTO), a group of businessmen, who are into the haulage of petroleum products across the country, yesterday said they might be forced off the roads by the current cost of operations.

In a press briefing in Abuja, the National President of NARTO, Mr. Yusuf Othman, who reeled out the major cost centres in the operations of the vehicles, stated that in the last one year, the cost of a truck head, for instance, had increased from N20 million to N35 million.

Furthermore, Othman stated that whereas a tank sold for N8 million in 2020, it is now sold for about N15 million, while the dollar which exchanged for N315 to the naira in the parallel market in 2020 has jumped to N570 this year.

In some cases, some of the costs which have increased by as much as 500 per cent, he said, included tyres which has jumped from N35,000 per one to N150,000 and batteries which were selling for N32,000 and is now procured for as much as N120,000.

The price of diesel, the transport owners said, has further risen from the N250 per litre it was selling in 2020 to N420 in February 2022, explaining that the members of the association could not continue to operate at a loss.

Othman explained that the situation had brought untold hardship to his members, noting that for more than a year now, they have been groaning under intense and harsh operating conditions occasioned by acute shortage of working capital for the efficient running of their operations.

Stressing that the operations of NARTO are carried out under a regulated environment, the organisation explained that the payment of freight, which it wants raised, is regulated by the Downstream, Midstream Regulatory Authority (NDMPRA) based on the overall petrol pricing template.

According to NARTO, this is done most often, without due regard to prevailing economic and market conditions, while worse still, the payments are received by transporters in arrears, usually 3-5 months after the products are delivered.

The group stated that in 2020, there was an approval by the defunct board of the Petroleum Products Pricing Regulatory Agency (PPPRA) to increase the freight rate by 26 per cent for which the endorsement of the Minister of State for Petroleum Resources, Timipre Sylva, was needed for implementation.

Othman recalled that the minister could not endorse the approval because it could result in either an outright increase in the pump price or lead to an increase in the subsidy on the product.

The transport owners stated that the situation generated a lot of tension in the downstream petroleum industry before the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) intervened.

Based on presidential approval, Othman said that an option was adopted for the approval of 10 per cent to be implemented immediately while the balance of 16 per cent was to be implemented based on a second option.

"To date this 16 per cent is yet to be implemented. Since then, unfortunately, the economic circumstance in the country has not been better. Our operational costs keep growing up exponentially.

"It should be noted, also, that all the above costs involve the use of foreign exchange to acquire which transporters must source by themselves since they are not beneficiaries of the government official forex allocations.

"The data presented does not include cost of maintenance, such as spare parts, gear oil, lubricants, overheads, etc," the association said.

Another serious problem affecting its operations, the group pointed out, is the condition of the roads, many of which it said are in precarious condition.

"Although, we commend the federal government for the NNPC Tax Credit intervention of N621 billion for the repair of 21 roads, they should speed up with the awards of the contracts and exercise extreme care in the supervision, monitoring and payment so as to ensure value for money in contract execution.

"This has become imperative to avoid substandard or poor work execution. In fact, we recommend that a committee comprising stakeholders should be set up to help in the supervision and monitoring exercise to ensure speedy completion of the work before the rainy season," NARTO stated.

According to the group, the current freight rate payable is not only inadequate but unsustainable for its continued operation, insisting that transporters would find it difficult to operate under the prevailing conditions.

"It is on record that over 98 per cent of petroleum products are transported by road today. The pipelines have not been operational for years while the railways, despite their rehabilitation, are yet to commence. The current PMS scarcity is partly, caused by lack of funds to run the trucks profitably.

"Many transporters have decided to park their trucks, and I am sure that many more will park theirs in due course if something drastic about increasing the freight rate is not promptly done.

"Consequently, we would like to notify the members of the public that while we sympathise with them over the inconveniences that PMS scarcity might be causing them, we are constrained to inform them that if the situation remains unattended we would have no choice but to park our trucks because we cannot continue to operate at a loss," NARTO stated.

Artmotion S.Africa