Firm lost K10mil in first lockdown

Business

THE Motor Vehicle Insurance lost about K10 million in revenue in the first lockdown period as a result of Covid-19 and related impacts, an official says.
Managing director Michael Makap said they feared the same would happen with the current 14-day lockdown of Port Moresby, particularly if it was extended.
Makap said this would affect its profits and eventually the dividends to be paid to the state at the end of the 2020 financial year.
He said MVIL would not necessarily lose money but rather the deferral of payments for registrations and licensing which was estimated to be significant would affect its income and cause profits to drop this year.
Makap said MVIL kept five to seven per cent of the registration fees it collected while the rest went to the provincial governments and the lost revenue over the first 14-day lockdown amounted to an estimated K10 million.
“It (current lockdown) will impact us and probably depending on the number of days we lose by closing the place down,” he said.
“It’s not that we will completely lose the revenue, but we defer it, it’s a deferral of income. It’s not like any other business.
“For us, a vehicle is a vehicle and you can drive it around without registration but you will have to come and get it registered somehow. So we will make that revenue but it’s difficult times and we base our estimates on a daily revenue so we lose that.
“People might decide to keep it (registration) until next year so this year we are hugely impacted if people do not come back and register and if the Covid thing gets worse. It’s quite significant and has a huge impact on a lot of our state-owned enterprises.
“With this sort of situation, I don’t think there will be a lot of profits coming. You need to make money and pay your dividends. If you don’t make money then you cannot pay your dividends.”

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