Why FG Delays Increasing Tariff on Tokunbo Cars – Engr AMINU JALAL, DG, NADDC

Sighted for the first time among his staff or subordinates, Engr. Aminu Jalal is not easily recognized as the boss. For his gesture and gait do not give out his erudition. But when asked questions relating to engineering or automotive industry, it becomes obvious that he is a man, who knows his onion.

AMINU JALAL: ...unless you import CKD, the custom will not allow you to clear imported fully built up cars at the concessionary duty.

AMINU JALAL: …unless you import CKD, the custom will not allow you to clear imported fully built up cars at the concessionary duty.

A mechanical engineer with close to four decades experience in engineering, teaching, consultancy and management, Jalal has, since 1994, been the arrow head of the National Automotive Council (NAC), which last year, merged with Centre for Automotive Design and Development to become National Automotive Design and development Council (NADDC).

A fellow of the Nigerian Society of Engineers (FNSE), the Nigerian Institution of Mechanical Engineers (FNImechE) and the Nigerian Institute of Management (FNIM), Jalal is also a member of the Society for Automotive Engineers (SAE) and the American Society of Mechanical Engineers (ASME). A native of Zaria, Engineer Jalal marked his 60th birthday last week Friday (23rd October 2015). Few days earlier, he was in Lagos for a periodic meeting with Auto Assemblers and investors.

In a chat with Motoring World’s Editor-in-chief, FEMI OWOEYE, at the venue of the meeting, Engineer Jalal cleared the cloud surrounding how Volkswagen AG’s emission deceit affects Nigeria, why federal government has not increased tariffs on imported used cars and lots more…

Excerpts

Motoring World: Following the recent Volkswagen AG’s emission scandal, a group known as SERAP, in an open letter, has asked president Buhari to investigate Volkswagen’s business in Nigeria. What is your take on this?

Engr. Jalal: As far as we know, the Nigerian assembler of VW does not assemble diesel cars. And to be honest, it is uneconomical to use diesel car in Nigeria, for diesel is expensive. Europeans want diesel, because it has lower carbon emission output than petrol and there is the global warming they want to help to reduce. Government over there encourage diesel cars by lowering the tax on diesel fuel, which explains why, in1990, only about 15% of cars were diesel, but now it is over 50%.

Motoring World: Certain analysts have observed that the cars in question are not the ones manufactured recently but those sold worldwide including Nigeria

Engr. Jalal: As far as I know, Volkswagen Nigeria is not importing diesel cars. Or let’s face it, who will buy, when the price of diesel fuel in Nigeria is almost twice that of petrol? And also it does not affect diesel trucks and buses, it’s only cars. Of course we still have diesel cars imported by those who deal in tokunbo. But importers are no more bringing them in.

Motoring World: Talking about emission standard, which ranges from Euro 1 to 6, what level is Nigeria?

Engr. Jalal: We are still on Euro 2, because level of sulphur in our fuel is too high. Its 3000 ppm for diesel and 1000 ppm for petrol, which can only support Euro 2, because this emission standard also has to do with fuel quality. To move up the emission standard in Nigeria, you must improve the fuel quality. For instance Euro 6 requires 10 ppm of sulphur, not 3000 or 1000. So we are trying to get our sulphur level down to 50. We are working with Standard of Nigeria and other stakeholders to see that we bring our standard to 50. And that will enable us to upgrade to around Euro 4, not even Euro 6. But we are working to see that we reduce the sulphur level of our fuel.

Motoring World: Since our refineries used to produce leaded fuel, certain Nigerians wonder if Nigeria-assembled cars are made to use leaded or unleaded fuel. What do you say to them?

Engr. Jalal: Since 2001, that is 14 years, we have removed lead from our fuel. We worked with our refineries and SON and refineries stopped adding lead to the fuel.

Motoring World: To encourage mass production and mass consumption of new vehicles, some stakeholders are pushing for outright ban on imported used vehicles, popularly known as tokunbo, while certain analysts believe that government should rather raise duty on tokunbo vehicles. Where do you stand?

Engr. Jalal: We prefer higher tariff on tokunbo vehicles, maybe when we have enough supply of vehicles, and we have a finance scheme for people to buy new vehicles, then we can look at outright ban.

Motoring World: Why don’t you want tokunbo vehicles banned now?

Engr. Jalal: Of course, we can ban, because there are countries around the world that took such step. For instance, you can’t import used cars into South Africa, China and Brazil. But in India, you can, but the tariff is 160%. You can import used cars to United States of America and United Kingdom. But they have standard that such cars must meet. The car must be tested to meet their standard. SON has signed an agreement with some companies to ensure that vehicles that come in have roadworthiness certificates, because lots of vehicles imported into this country were those that could not meet roadworthiness standard abroad.

Motoring World: Although higher tariff on tokunbo vehicles is part of the content of the Automotive Policy. But the government seems to be reluctant at implementing it. Why?

Engr.Jalal: The reason is that the government wants to ensure that vehicle Finance Scheme is in place for support, so that even if we ban Tokunbo, Nigerians would still be able to buy a new car. That is what the government told us. If we ban Tokunbo now, and people need to pay 100% for a new vehicle, it will be difficult. That’s the only reason. But we are doing all our best to put the financing scheme in place.

Motoring World: As some analysts believe, do you agree that delay in implementation of the policy to the letter was more political, especially because some people did not want to loose last election?

Engr.Jalal: Even now without any election, the new government’s consideration is affordability. Right now, the truth is that it is easier to make 100% payment for a used vehicle than doing same for a new one. But when financing scheme is in place, then people can easily buy new cars. So we can then jerk up the tariff on used vehicles. Remember, before 1985, Nigerians were not buying imported used cars; it was all new, because they could afford it. Used cars were bought from those who used new cars for some time and decided to sell it to buy a new car. We were not importing Tokubbo at all before 1985.

Motoring World: Looking back at the nation’s automotive policy, how would you access the progress made so far?

Engr. Jalal: We have increased assembly operations, so much that we are assembling Hyundai, Kia, Nissan, Volkswagen, Honda, and Peugeot. Some started assembling commercial vehicles last year and now they are doing cars. And then Ford, Isuzu will start next year.

Motoring World: Why did your council suspend licensing new assembly plants?

Engr. Jalal: Before the policy, we had 14 assembly plants and body builders. Now we’ve licensed another 15, making about 30. There are some under processing. Not all licensed ones have started. So we just felt it’s time to consolidate these assembly operations. We can’t just continue to have too many assembly plants. There will still be few to be licensed, which are under processing.

Motoring World: Are there companies indicating interest in making automotive local contents in Nigeria?

Engr.Jalal: There are two issues here. The assembly plants themselves are going to invite their suppliers. For all auto manufacturers only make about 30 per cent content and buy the rest from suppliers. It is when assemblers are able to sell certain volume they will be able to invite suppliers. The second one is we are working with those who are already supplying before, for instance to Peugeot Nigeria. They used to do glasses, radiators, cables, carpets, seats, bumpers, tyres, batteries, filters, fan belts, chemicals, paints. We are trying to revive them so that they will be able to resume supplying the assembly plants. Our next move now is to revive the local content manufacturers and ensure they do required quality.

Motoring World: The auto policy allows assemblers to import some fully built up vehicles. How does the government ensure this allowance is not abused?

Engr.Jalal: Yes there are ways by which we check it. First, unless you import CKD, the custom will not allow you to clear imported fully built up cars at the concessionary duty. When you assemble one CKD or SKD, you can import two fully built-up vehicles. The custom has a record of what assemblers are importing, because they have to clear through the custom, who also gives the concession. So the custom knows how many cars a company has imported. That is a good check.

Motoring World: There was a 1994 gazette or decree forbidding federal or state governments from buying imported vehicles being assembled in Nigeria. Is it still in place?

Engr.Jalal: The gazette was started in 1994 and reissued in 2011. It is still there and still active.

Motoring World: Why I asked that question is that many years ago, most government official vehicles used to be Peugeot. But from recent years, government at various levels started buying imported vehicles version of vehicles assembled by Peugeot?

Engr. JALAL : Before the policy, we had 14 assembly plants and body builders. Now we’ve licensed another 15, making about 30...

Engr. JALAL : Before the policy, we had 14 assembly plants and body builders. Now we’ve licensed another 15, making about 30…

Engr. Jalal: That has stopped. Now there are Nissan, Hyundai, Kia, VW, etc which they can also use. We have many brands now. But that time, only Peugeot and Volkswagen were doing assembly.

Motoring World: Are you saying federal government will henceforth source their official vehicles from local assembly plants?

Engr. Jalal: Yes. As you are aware, before, we did not have locally assembled SUV. Now Nissan SUV is assembled in Nigeria. And when Toyota starts, government can source from them too, if that is what they prefer.

“As far as we know, the Nigerian assembler of VW does not assemble diesel cars. And to be honest, it is uneconomical to use diesel car in Nigeria, for diesel is expensive.” – ENGR. AMINU JALAL

 

 

 

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