Expert urges operators on competence

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The pioneer Managing Director and Chief Executive Officer, GPC Energy and Logistics Limited, Mr Elvis Okonji, has urged the operators in the industry to deepen their core competence, build strategic reserves, review their finance strategy, diversify, enshrine situation analysis, and risk management to guarantee sustainability.

In a statement on Tuesday titled ‘Expert urges deepening of core competence, strategic reserve’, he said this during a press briefing in his office.

Okonji, who is an expert in energy and logistics sector said, “We also need to envisage modifications to contractual clauses relating to endemics and pandemics, the industry is highly leveraged, labour and capital intensive.

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COVID-19 brought to the fore the risk of pandemics and nature forcing immediate shutdown of businesses.

“Majorly hit were the alcoholic beverages and construction materials segments, given the huge obligations associated with heavy duty truck haulage, strategic cash reserves to cover a minimum of six to 12 months operations is ideal to sustain operations well into an unforeseen occurrence;

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“The operability of these reserves will be player specific bearing in mind the negative impact of double-digit inflation rates on future value.”

He stated that the pandemic also brought to the fore the need to position logistics companies for more sophisticated sources of financing.

“We envisage a gradual switch in the industry’s heavy reliance on bank financing to the capital market, bonds and equity issues will become more desirable to hedge long term interest rate and foreign exchange risks while commercials papers may be sought to bridge short term financing needs, equity raising will improve leverage within the industry and position it for increased participation.” He added.

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