Business

UK car industry says Brexit rules are denting competitiveness

UK car industry says Brexit rules are denting competitiveness

Car remains the UK’s No 1 export but volatile energy prices and the cost of complying with EU regulations post-Brexit are blunting the industry’s competitive advantage, the sector’s trade body has said.

Nine in 10 firms in the industry told the Society of Motor Manufacturers and Traders (SMMT) that costs, measured in time and resources, had increased as a result of leaving the EU, with 60% saying the extra expense for trading with the bloc was a “much more significant rise than other export destinations”.

Mike Hawes, the SMMT chief executive, said: “The cost of complying with new regulations has made the UK potentially less competitive compared with some of our European counterparts.

“The first few weeks months were incredibly difficult. There were delays at borders, some of those were teething problems, some of those issues were more substantive. Undoubtedly the industry is facing additional cost and complexity; costs which generally have to be absorbed, to maintain competitiveness.”

The SMMT said that regardless of such issues, the EU would “remain a central trade partner”, with about half of all cars made in Britain exported to EU member states, while almost all vans exported by the UK end up on European roads.

Overall vehicle export revenues to all markets reached £27bn in 2020, even as the Covid pandemic disrupted trade flows and shut down markets around the world.

The UK automotive sector as a whole generated a total trade revenue of £74bn, with more than 80% of British-built cars and more than 60% of light commercial vehicles destined for export.

The SMMT hopes for caps on energy prices in recognition of the importance of the new generation of electric cars to the country’s climate emergency goals.

“Production of batteries, for instance, is a capital-intensive energy industry. It’s also an energy intensive industry. So being regarded as a energy intensive user would potentially allow us to take greater advantage of caps on energy.”

The industry has energy efficiency targets in place through climate change agreements with the Environment Agency that enable some energy discounting.

But Hawes said: “We are still disadvantaged compared with some of our European colleagues.”

Miyuki Takahashi, Nissan’s general manager for government affairs, told an SMMT conference on Tuesday that trading agreements between the UK and EU were “crucial and indispensable to sustain our business”, which includes its Sunderland manufacturing plant employing 6,000 people.

She added: “We want the UK to be our electric vehicle and battery hub … We are looking to localise many components of the battery and EV supply in the UK, to comply with rules of origin and to build up trade for the UK and Japan.”

While the UK is looking to join an Asia-Pacific free trade area, Takahashi said it was unlikely that it would mean more Nissan cars directly exported from the UK. “It’s much cheaper to send it from Japan – and when we think about carbon cycle, the shipment is a big part of the emissions.”

Adrian Hallmark, the chief executive of Bentley, told the conference the Brexit agreement was functioning but had added administration costs and would need constant updating. “We’ve got another six people, it now costs us £6m more and we’ve got an extra warehouse we didn’t need … The trade deal works – but it’s like we’ve got married and have a whole life together. Now let’s get the relationships working.”

He urged government to help “make the UK a safe haven, a go-to place for battery production” as the transition to electric vehicles approaches. Hallmark warned that otherwise rules of origin in the trade deals, which require most of the car’s value to be locally sourced, would need updating for electric vehicles if tariffs were to be avoided, with the cost of batteries up to three times that of Bentley’s traditional engines: “If we don’t find a way of managing the cost of battery and how it distorts the rules of origin, that will cause problems and create tariffs.”

Business

Nigeria begins sales of Crude Oil in Naira

Nigeria has officially commenced the sale of crude oil and refined petroleum products in Naira.

This milestone, announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, marks a new chapter in the nation’s economic strategy.

Effective from October 1, 2024, the Federal Executive Council (FEC) directive to trade crude oil and petroleum products in Naira was implemented following a key meeting of the Implementation Committee.

The meeting included prominent stakeholders, such as the Minister of State for Petroleum (Oil), the Special Advisers to the President on Revenue and Energy, executives from the Nigerian National Petroleum Company (NNPC), and top representatives of the Dangote Group. The Group Chief Executive Officer (GCEO) of NNPC and its Chief Financial Officer (CFO) were also in attendance, underscoring the initiative’s national significance.

The strategic policy, championed by the Bola Ahmed Tinubu-led administration, is expected to reshape Nigeria’s economy.

By denominating oil sales in Naira, the country aims to bolster economic growth, enhance stability, and promote self-sufficiency.

The move is seen as a crucial step toward reducing dependency on foreign currencies, positioning Nigeria for long-term success amidst the ever-changing dynamics of global markets.

Business

Electricity Tariff hike: Nigeria’s discos collect N887bn as revenue

Revenue of electricity distribution companies in Nigeria increased to N887.86 billion in the first seven months of 2024 amid an electricity tariff hike.

This is according to the analysis of Nigerian Electricity Regulatory Commission data on Discos’ commercial performance for the seven months of 2024.

The data showed that out of N1.14 trillion electricity bill issued by Discos to customers, the companies recorded 79.7 percent collection efficiency which stood at N887.86bn in the period under review.

A breakdown of the bill collection by Discos from January to July 2024 includes N95bn, N97bn, N100.44bn, N142.92bn, N191.65bn, N150.86bn and N162.14bn which amounted to N887.86 billion.

Further analysis showed that during the corresponding period in 2023, the companies issued bills totaling N797.18 billion, while they managed to collect N604.15 billion.

This surge in revenue collection is not unconnected to the hike in electricity tariff in April from N66 per kilowatt-hour to N225.

Recall that amid the call for the electricity tariff hike reversal, it was reviewed downward to 206.68 per kilowatt-hour, but was reviewed upward to N209 per kilowatt-hour thereafter.

Though the electricity tariff hike was introduced for customers getting at least 20 hours of power supply, Nigerians have lamented the burden occasioned by the tariff.

The energy cost pain has been exacerbated as Discos migrate more consumers to Band A feeders.

The Minister of Power, Adebayo Adelabu, however, insisted that Nigeria’s electricity tariff is among the cheapest within African countries.

Business

FG unveils seven CNG conversion centres in Ekiti

The Presidential Compressed Natural Gas Initiative (P-CNGi) has unveiled seven centres where commercial transporters can convert their petrol to CNG-powered vehicles in Ekiti.

The Program Director of P-CNGi, Michael Oluwagbemi who spoke during the official unveiling of the centres and handing over of 15 CNG-powered buses to government in Ado-Ekiti, Ekiti State capital at the weekend, urged commercial transporters in the state to visit the centers to convert their vehicle free of charge.

He explained that the CNG initiative is cheaper, more convenient, and safer compared to petrol, noting that the administration of President Bola Tinubu is determined to energize the economy through the initiative which he said would create jobs and enhance sustainable development.

Oluwagbemi disclosed that the administration is targeting one million vehicle conversions to CNG by 2027, saying that no fewer than 125 centres have been opened across the country.

He listed the new centres in Ekiti state to include, Femoyo centres, Beijing Universal Limited, ABJ oil and gas, Bovas Company, and NADDC training center in the state capital.

The program director said that the 15 buses donated would be deployed for inter and intra-state transportation towards achieving about 40 percent reduction in the transportation cost and ultimately reduced hike in food items.

According to him, ” the government of President Bola Tinubu through the presidential CNG initiative is committed to ensuring they(transporters) use this for their vehicles because it is cheaper, cleaner and more importantly it is safer and more reliable.

” This is a compressed natural gas, it is not the same you use in your kitchen to cook. It is lighter and stored in a bulletproof container. It is also the fact it is produced in Nigeria and what the president said is that instead of us to continue to import poverty and export jobs. He said will need to look inward and use what God has given us.

” It is about job creation, it is about reducing the cost of transportation and ensuring economic development by moving away from subsidy payment where we were making the few richer.

” This is a more sensible and reliable path for Nigeria in terms of our energy sector, and that is what the president is doing with this initiative.”

Speaking, the state governor, Biodun Oyebanji commended the federal government for the initiative, adding that the state would support the programme towards ensuring that more vehicle owners embrace the CNG conversion.

The governor who was represented by the commissioner for Infrastructure and Public Utilities, Professor Mobolaji Aluko explained that the CNG conversion initiative would help in generating employment opportunities and economic development in line with his shared prosperity agenda for the state.

The state chairman of National Union of Road Transport Workers(NURTW) Joseph Falope and his counterpart in Road Transport Employers Association of Nigeria(RTEAN) Sunday Adeola, expressed delight over the initiative, assuring the government that members of their respective unions would take their vehicles for conversion to CNG.

On his part, the Chief Executive Officer of the National Automotive Design and Development Council (NADDC), Joseph Osanipin said the council has trained no fewer than 45 technicians across the state on how to convert petrol vehicles to CNG-powered vehicles.