AUnited Nations proposal to curb used-car importsintoAfrica may have a negative impact on lubricant sales, industry insiders told LubesnGreases. In April, the Inland Transport Committee of the UN Environment Program (UNEP) gathered 90 transport experts from around the world to discuss the development of voluntary regulations and standards governing the trade of secondhand vehicles in sub-Saharan Africa.

Secondhand Smog

Used cars and trucks comprise the majority of the 42.5 million registered vehicles on Africas roads and Deloitte Africa Automotive Insight estimates that 8 out of 10 of them are imported. That figure is as high as 99 percent of vehicles imported into Kenya, reported the UNEP.

The number of imported vehicles could rise across the continent when plans to ban gas and diesel light vehicles in parts of Europe by 2040 are enforced. While these millions of obsolete cars could end up anywhere in the developing world, sub-Saharan Africa is their most likely destination.

Used cars often risk failing stricter emissions limits in their country of origin and find their way into Africa, where standards, although steadily improving, are either more lax or are circumvented by smuggling. Emmanuel Ekpenyong, terminal manager for HOGL Energy Ltd. in Lagos, Nigeria, told LubesnGreases a regional regulation would be more effective in halting the illegal trade of used vehicles across sub-Saharan Africas unsecured borders. Due to the porous nature of our borders, vehicles below the allowed [emissions] specifications for member countries still find their way in, he said. Cases abound where dealers in secondhand vehicles deliberately remove the catalytic converters … and smuggle such vehicles into neighboring countries with strict environmental standards. The regional approach will yield better results.

Although cheaper to buy, older vehicles are less fuel-efficient and require more frequent oil changes due to dated technology and engine wear. If the UNEP proposal is enacted, the trade of used cars, both legal and illegal, could slow.

Impact on Lubricants Consumption

According to Rob de Jong, head of the transport unit at UNEPs division of technology, the international community does not currently address the impact that the used-vehicle trade has on pollution, human health and manmade climate change. Air pollution is a critical challenge for many African countries. The UNEP estimates about 600,000 deaths across the continent are associated with air pollution every year.

Deloitte also estimates the motorization rate in Africa at 44 vehicles per 1,000 people, which is a far cry from the global average of 180 vehicles per 1,000 people. This is good news for air pollution but less so for the lubricants business

While no concrete framework was set out in April, delegates to the UNEP committee referred it to the ministerial level, such as the third meeting of the UN Environment Assembly slated for December 2017 in Kenya.

Stakeholders in Africas lubricant market are concerned that the UNEP proposal, if implemented, would negatively impact lubricant consumption in Africa, where engine oil sales were 950,000 metric tons in 2016, according to Kline research.

John Erinne, chief executive officer of Matrix Petrochem in Lagos, told LubesnGreases that regulation of used-car imports would lead to newer vehicle fleets. This should result in higher demand for superior-grade lubricants and less frequent drain intervals. It may also lead to reduced lubricant consumption because the number of cars imported may likely drop due to higher costs and less affordability, he said.

The impact would be similar in North Africa, too. Rami Al-Kinanny, general manager for Hitec Oils & Grease, an Egyptian-Indian joint venture that re-refines mineral oils and supplies base oil and grease, said that any regulation will surely dent lube consumption. The impact will be uneven since different engines require a variety of oils, he said. If the imported vehicles are mostly diesel engines and considered relatively new cars – made in 2010 and after – this would require higher grades of lubes such as API CH-4 and CI-4. Such lubes cost much more than the monogrades commonly used across Africa, Al-Kinanny said.

Boston Moonsamy, CEO of Umongo Petroleum, a base oil and additives distributor based in Durban, South Africa, disagrees that the proposed regulation will have much of an impact on the quality or consumption pattern of lubricants in sub-Saharan Africa. These imported secondhand cars are mostly less than 10 years old and in reasonable condition at the time of import, he said. This is not be the case across the entire continent. In Uganda, for example, the average age of an imported vehicle is 16.5 years and it may have another 20 years of road time.

Shift to Better Oils

Other stakeholders are more positive about the effects the proposal may have on Africas lubricant markets. They think it may be the impetus for a much-anticipated shift to higher grade oils in sub-Saharan Africa.

Most of the newer second-hand vehicles, except those from Asia, would require higher grade oils. Thus buyers of such vehicles will be forced to procure the recommended lubricants, HOGLs Epenyong, told LubesnGreases. For instance, Kline research estimates that Group I base stocks account for more than 75 percent of the engine oil consumed in Africa, while Group II accounts for about 17 percent; Group III 3 percent and rest the remaining 5 percent.

While Hitecs Al-Kinanny supported this conclusion, he added that the shift would be gradual. It will help the shift from API Group I monogrades to Group II and III multigrades, but we wont witness this shift immediately. It will take some time, but it will happen eventually.

Karim Ben Hassine, lubricants, additives and chemicals account manager for additives company BRB in North Africa, agreed. The result will be to shift from poor-quality to high-quality lubricants. But, he added, it is important to impose a condition on lube quality that requires a minimum performance specification of API CD.

Synthetics and Biolubes

Some members of the industry LubesnGreases interviewed agreed that regulating the movement of used vehicles to sub-Saharan Africa would result in higher demand for synthetics, they also feel that the
African market is not ripe for biolubes. While Hitecs Al- Kinanny said that the potential for the increased use of biolubes is slim because over 99 percent of African consumers do not know that biolubes even exist.

Hassine predicted increased consumption of semisynthetic and full synthetic lubricants. There is a huge possibility that the consumption pattern will shift from Group I to Group II in sub-Saharan Africa – from SAE 50, 20W-50 and 15W-40 to 10W-40, he said.

Matrix Petrochems Erinne, however, felt that the relationship between enhanced regulation on the import of used vehicles and increased demand for synthetics and biolubes is not a given. It is doubtful that this shift will amount to significant growth in synthetic lubes or biolubes.