Cement manufacturers give conditions to drop hike in the product price

NIGERIA, Feb.. 20 – Cement Manufacturers have agreed to sell a 50kg bag of cement at the rate of N7,000 and N8,000 at a retail price, depending on location across the country.

The product manufacturers, however, requested the government to address the challenges of gas shortage, import duty, smuggling and road network, stressing that these are the factors that influences the price.

Dave Umahi, the Minister of Works  made this known on Monday in Abuja, after a meeting with leading cement manufacturers in the country.

The Minister added that the impact of the cement price cut would be felt within 30 days.

The meeting was against the backdrop of the hiking prices of cement to around N13,000 in retail stores in the Federal Capital Territory and Enugu.

Findings by major media houses shows that the price hike was attributed to wholesalers reselling to retailers at higher prices.

Umahi lamented the current rate, stating that it was abnormal and detrimental to economic prosperity sought after by the current administration.

Reading the communiqué after the three-hour meeting directed by President Bola Tinubu, the minister said certain issues, including smuggling, bad roads, high energy costs, and the foreign exchange crisis are responsible for the high prices.

He emphasized that manufacturers had expressed their readiness to bring down prices in the future.

He said, “The meeting discussed extensively the current prices of cement vis-à-vis the challenges from the manufacturers. They talked about their challenges ranging from the high cost of gas, high import duties from their spare parts, and bad road network and, of course, the high FX rate.

 “They also talked about the issue of cement across our borders and how it is creating scarcity and a high increase. We agreed that the trade ministry will seek some remedies from the President on the high cost of gas and the issue of import duties and fixing of the roads within the distribution corridors.

“The cement manufacturers and the government have noted that the present (sic) high cost of cement in the market is very much abnormal in some locations nationwide. Ideally, they noted that retail price to a consumer should not cost more than between N7,000 to N8,000 per 50 kg bag of cement.”

According to the minister, the government and the cement manufacturers, which are Dangote Plc, BUA Plc and Lafarge Plc have agreed to have their cement prices nationwide between N7,000 to N8,000 per 50 kg pack of cement, depending on the locations.

He added, “Going forward, the government advised manufacturers to set up a price monitoring mechanism to ensure compliance with the prices that are set today and manufacturers have willingly accepted to do that and sanction any of their distributors or retailers found wanting.”

Umahi mentioned that the government anticipated a reduction in the agreed price, following interventions to address manufacturers’ challenges on gas, import duty, smuggling, and better road network.

He noted that the meeting concluded with an agreement to reconvene in 30 days to assess the progress achieved.

In her remarks, the Minister of Industry, Trade and Investment, Doris Uzoka-Anite, pledged the government’s commitment to collaborate with industries to remove bottlenecks and encourage smooth operations.

“We will continue as a government to collaborate with the industries to deepen our engagements with them and remove bottlenecks to have smoother operations and the benefit of the backward integration program is enjoyed and felt by every citizen. Nigeria stopped importing cement since 2012 and there is no reason why we should be experiencing the kind of issues we are having in cement pricing,” she asserted.

On his part, the Group Executive Director of BUA, Kabiru Rabiu, disclosed plans by the company to supply 6 million tonnes of cement into the market to mitigate the surging prices.

He also said cement continued to be smuggled by mischievous retailers because the price was the cheapest in the region, which made it vulnerable to smuggling.

According to Rabiu, this activity does not go through official channels and does not benefit the government.

“BUA is committed to bringing in an additional six million tonnes of cement in the next few weeks and that would seriously dampen the pressure on supply. We would remain committed to these engagements and we would reassemble in 30 days.

“The high cost of cement in neighbouring countries has made smuggling lucrative. The cost of cement in Chad and Cameron is about N15,000 per bag and we noticed that distributors through the North Eastern part smuggle products to neighbouring countries.

 “They do that not through official channels and the government is not benefiting from their export. Unless that is sorted, we’ll continue to have pressure from those markets.

“There is a big disparity between demand and supply in Nigeria. I think some plants have issues which have reduced production. We are at the peak of cement demand, but supply seems less. So, there is going to be a crisis and that is why we are working hard to bring more products to the market to reduce the pressure of demand and supply in the market,” he declared.

The outcome of the meeting was fruitful if implementation will be carried out as agreed by all the stakeholders.