As a direct consequence of the major policy somersault of the Federal Government in 2006 by significantly reducing import tariff that was meant to protect local tyre manufacturing industry from the huge infrastructural deficiency, especially electric power, from the prevailing 40% to only 10%, reconsideration of local tyre manufacturing strategy was forced. This instantly made local tyre manufacture unprofitable and the only two tyre plants in the country that had operated since 1963 by Dunlop and Michelin had to shut down in 2008 and 2006 respectively.
Our company however continued dialogue with the various Federal Governments (Obasanjo, Yar'ardua, Jonathan) with a view to securing a reversal of this major policy, especially as we had just completed a major US$50m expansion into the truck tyre segment a year earlier in 2005. When it became obvious that the policy reversal was not forthcoming, we had to in 2012 take the interim strategic decision to realise all our manufacturing assets to enable us to repay our indebtedness to financial institutions of over N8 Billion, which we achieved by the end of 2014.
As we still believe in the future of local tyre manufacture in view of the huge market in the West and Central African sub Regions, with no single tyre plant currently, we have strategically retained our investment in Natural Rubber Plantations through our 60% shareholding in our subsidiary company, Pamol Nigeria Limited, the key minority shareholders being Cross River State Government with 21% and Delta State Government with 15%. Natural Rubber constitutes about 50% of tyre raw materials, with Carbon Black at about 25%, both of which are significantly locally available.
We have now recorded significant results with the Federal Government, through the National Automotive Design and Development Council, with the conclusion of a new Automative policy which was taken into consideration the key policy negatives of the 2006 reversals. This new policy is in the process of being forwarded to the National assembly for legislation in order to strengthen the future policy stability in this regard.
Meanwhile, we have developed a 10-year strategic business plan for a return to local tyre manufacture, which is currently being marketed to enable us secure a core lead investor for the project as the company currently does not have a single investor with up to 5% shareholding to provide the required leadership, after which we would jointly approach our technical partners. We are already in serious discussions with a State Government that is setting up an Industrial Park with provision for an automobile cluster and a tyre manufacturing plant, among other possible options
We wish to use this medium to appreciate the understanding exhibited by our shareholders and other stakeholders during this very difficult phase in the history of our company, while we continue our efforts to return our company to profitable operations in order to continue our over 57 years corporate journey.