GPC Energy eyes West Africa push as logistics firm targets next growth phase

GPC Energy and Logistics Ltd. has spent the past decade and a half transforming itself from a five-truck operation into a more than 900-vehicle logistics business serving some of Nigeria’s biggest multinational companies.

Now, after delivering 55% compound annual revenue growth since a bond issuance in 2021, Elvis Okonji, the company’s CEO, in this interview with Bethel Olujobi, says the firm is entering a new phase focused on technology, diversification and expansion across West Africa.

GPC started with 5 trucks and in little under two decades, expanded that into a modern fleet of over 900 heavy-duty trucks serving multinationals in the FMCG and cement industries across Nigeria. At what point during these roughly 17 years did you know you were going to be successful?

When we started operations in 2010, our capacity dropped by 20% after the very first trip and what followed was an intense struggle to sustain operations. We started accessing credit in 2012 and grew gradually until 2014 when we got our first big break with our then single multinational client in the building materials business. It was in 2015, right after that major transaction that we pivoted into other sectors and expanded our service offering that I would say we finally began to glimpse the success that was coming.

In 2021, GPC entered the domestic debt capital market which was heralded by a 10-year N20 billion bond issuance that was 25 percent oversubscribed by domestic institutional investors. The proceeds were to expand your fleet by at least 220 trucks and sustain a strong growth trajectory. Halfway through the bond’s tenure, how much progress has been made and what should investors expect in the next five years?

Halfway through the bond’s tenure and over the next five years, investors can expect continued disciplined growth, with a focus on technologydriven fleet management, diversification into other segments of the logistics value chain, and positioning for regional expansion into the rest of West Africa.

The 2021 bond coincided with post Covid supply chain disruptions and global economic slowdown, yet we acquired about 260 trucks from the proceeds as we had intended. Today we have not only navigated this challenge, but this mass has also ensured that we surmounted the local economic headwinds from the 2023 reforms to deliver a topline performance of 55% CAGR. Integrity and Trust areone of our core values at GPC. If we say we will do something, it is most important to us that we follow through.

At the time of the debt issuance, Nigeria’s Monetary Policy Rate (MPR) remained fixed at 11.50 percent. Given that institutional investors now demand significantly higher yields to match the 26.5 percent benchmark, is issuing the remaining N30 Billion tranche under the corporate bond programme still viable in the near term?

Timing is very important when exploring the bond market for funding. The situation in 2021 posed challenges for business but also presented an opportunity in the pricing, and we made the best of if.

Now in 2026, the situation is quite different with indicative rates much higher, but this also presents opportunities for us in the logistics market, especially as we consolidate our position as industry leaders. The bond is also wrapped inthe Guarantee of InfraCredit whose local credit enhancement would provide some savings on the closing rate. We are positioned to take full advantage of these varied situations and deliver returns to investors.

What have been the effects of the prolonged conflict in the Middle East on your company’s operations and the energy and logistics industry in general?

The most direct impact is on working capital. Though disadvantageous, the conflict further tilts the balance in favour of the major industry players. If you do not have capacity, you simply begin to park trucks overnight.

The major driver of these escalations is rampaging energy prices which we have managed to hedge via our pricing model. Beyond this, however, our focus has been on efficiency and sustainability through a phased energy transition to drive down these costs in such adverse business conditions. This is not a time to be doing everything acceptably; it is a time to do a few things exceptionally well.

With diesel prices and international freight costs fluctuating unpredictably owing to the war, how resilient is your company’s business model to sudden cost increases across its long-haul transport corridors? Also, because these delays disrupt raw material imports for major Nigerian manufacturers, are you seeing fluctuations in haulage demand?

Over the years, we have carefully positioned the business in this niche market where we are not forced to bear the brunt of the Volatility in the market. Our business model is built on scale, efficiency, and longterm contracts with multinationals. The contracts have escalation clauses that cushion the direct impact of these sudden cost spikes. We have also secured a diversified portfolio of clientele which helps to spread the risk of any threat specific to a particular industry.

Still on the topic of cost increases, ongoing currency adjustments have affected customs duties and port fees. For GPC, how are rising import clearance costs and port delays influencing equipment procurement plans and your total cost of operations?

Being a one-stop shop logistics solutions business; we have the capacity to control almost all aspects of our shipping and import costs directly. This means we clear our goods very fast and are able to keep the cost down. Improving our freight clearing and forwarding efficiency is the key here. We are perfectly positioned to take advantage of all the recent innovations by the government in I.T with respect to clearing, to improve our delivery times and eliminate wastages.

Nigeria loses up to 50 percent of its agricultural yield due to a lack of refrigerated transport. Why is this still a problem, and how far has GPC come in meeting Nigeria’s critical shortage of cold chain logistics, particularly for pharmaceutical and agricultural distribution?

What a lot of people don’t realize about Nigeria is that the cold chain logistics crises is an energy crisis. In Canada and North America, if you check most households, people have two or more large volume deep freezers. You buy what you need in bulk when it is in season and store for long periods of time. The reason why you cannot do that in Nigeria is because we do not have stable power.

Cold Chain is not just about having the trucks to move agricultural produce about without deterioration, it is about long-term storage. How can you store long term anywhere in Nigeria without cheap and affordable power without eroding the economic value of such long-term storage? Solar power would be the solution, but the initial capital investment is still so high that it is unattractive. This is what the government needs to fix first.

Considering the gradual adoption of electric vehicles in Nigeria, how is GPC adapting its fleet management strategy to incorporate EV charging infrastructure and maintenance at your local terminals?

Electric vehicles are my favourite example of industry disruption in the last decade. Using an Electric vehicle as a daily driver in a city like Lagos just makes sense!

However, there are limitations in battery capacity nowaffecting the deployment of electric technology to Heavy Duty Bulk Cargo Transport. The Tesla Semi was in development for more than 8 years and is just set to start production and delivery later this year, with production pushed back several times.

Our OEMs are equally developing and pioneering research in this field. They already have a few pilot platforms running and we are eager to pivot to technology once it becomes economically viable.

What government policies or regulatory reform would make a world of difference in unlocking growth and investment within the energy and logistics industry?

The front runner will be Infrastructure Reforms.

Nigeria with an estimated population of 240 million people has more than 3.5 times the population of France with about 66 million people. Yet, France has more than 1million kilometers of paved road while Nigeria has about 60,000 kilometers. This is also bearing in mind that Nigeriahas a landmass 1.7 times that of France. The infrastructure deficit is glaring. We have so many people, we produce and consume so much, and all these goods must be moved by road at some point. Nigeria simply needs more and better roads. And this is the first area of reform the government needs to tackle to help us in Logistics.

Another area of support is multiple taxation across states. Multiple revenue collecting frameworks and agencies across states make it unbearable for industry operators along delivery routes.

In 2019, you turned down a N10 billion buyout offer to retain equity and scale independently right before the Covid19 pandemic that led Nigeria into another recession. What was going through your mind at the time. Did you feel any regret during those turbulent months? And looking back 6 years later, what would you say was the most important business decision you made to keep your company standing?

No, not at all. We had a roadmap for the business, and we knew it was not time to sell. We needed some more time to make good progress on the internal transformations that we had begun back then. Today, the figures speak for themselves. What we have been able to achieve in the past 6 years is a testament to the vision of the business. I have often said that I want to build a business that will outlive me and opening the business to other investors is thereforean inevitable business decision. Somebody set up DHL, somebody set up UPS. Today, those businesses are multinational and multigenerational. God willing, GPC Energy and Logistics Limited will soon be. Looking back now, I am proud of what we have achieved, and we can now look forward to a more diverse future.

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