Exorbitant Cement Prices and Matters Arising, by Rahma Oladosu

Exorbitant Cement Prices and Matters Arising, by Rahma Oladosu

 

Within a week, retail price for cement leapt from N5,000 to N10,000 in the market due to certain economic realities. Even without official statement from producers or sellers, Nigerians began to throw tantrums because the move is a ploy “to deny the common man ability to own a home and become his own landlord.”

Nigerians have found the cement price situation unacceptable since manufacturers and raw materials are indigenous.

“We refer to our previous pronouncements regarding our intent to reduce cement prices upon the completion of our new lines at the end of the year, in order to spur development in the building materials and infrastructure sectors.

“As per the commitment made to reduce prices and following a periodic review of our operations for efficiency, the management of BUA Cement Plc wishes to announce and inform our esteemed customers, stakeholders, and the public that effective October 2, 2023, we have decided to bring the price reduction forward. As a result, BUA Cement would now be sold at an ex-factory price of N3,500 per bag so that Nigerians can begin to enjoy the benefits of the price reduction before the completion of our plants.

“Upon completion of the ongoing construction of our new plants, which would increase our production volumes to 17 million metric tons per annum, BUA Cement PLC intends to review these prices further in line with our earlier pronouncements by the first quarter of 2024.

“NOTE: All pending, undelivered orders which had been paid for at the old prices will be reviewed downwards to N3500/bag in line with the new pricing from October 2, 2023. Our licensed dealers are also enjoined to ensure that end-users benefit from this reduction in ex-factory prices as we will monitor field sales to ensure compliance,” this was statement from BUA group in the first week of October 2023 which at put many in the seventh heaven.

Effective immediately, a bag of cement was supposed to sell at N3,500. Though the announcement even suggested a further reduction this year, retailers at the time expressed skepticism. According to them, transportation cost alone will not allow retail sales to be at N3,500 with N5,000 being a more realistic price in order to get a return on investment.

Welcoming 2024, Cardinal Stone reported that cement prices this year will remain high despite a slash in prices by BUA due to producers seeking to offset operational costs, volatility in the forex market and high inflation. With the current prices, it is safe to say that we are leaving the reality of the report.

It however also projected a rebound in the sector’s performance in 2024 based on the increase of infrastructure budget to N1.32 trillion, creation of the Infrastructure Support Fund (ISF) by the Presidency, active implementation of the African Free Trade Agreement (AfCTA), increased production capacity, etc.

Current Prices of Cement

The Nigerianprices.com cited the current price of cement per bag between N6,200 and N8,200 putting the mean price at N8,000 while wholesale is averagely N4,200,000 per trailer load. Retail prices for different brand are:

Dangote cement: N9,900 – N10,500
Lafarge cement: N9,100 – N10,500
BUA cement: N9,900 – N10,500
Elephant Cement: N9,200 – N10,500
Ashaka Cement: N9,900 – N10,500

Wholesale prices (per 50kg bag) according to same brands:

Dangote Cement: N8,000 – N11,300
Lafarge Cement: N8,000 – N10,440
BUA Cement: N8,000 – N11,000
Elephant Cement: N8,000 – N10,400
Ashaka Cement: N8,000 – N11,000

Matters Arising

To control the astronomical rise in price of cement, the federal government and cement manufacturers have agreed after rigorous engagement on a N7,000 to N8,000 per 50kg bag of cement tentatively depending to geographical location or proximity to production site.

For the agreement to see the light of day, manufacturers have urged the government to address concerns surrounding bad roads, smuggling, high cost of energy, and the forex crisis, which are the major stumblingly blocks to the achievement of reasonable prices in the industry.

The federal government has however pushed back on the issue of forex, saying cement is locally produced and should not have anything to do with it. The government even threatened to open up the borders and allow importation if the cement manufacturers don’t bring down their prices.

The recent developments are geared towards ensuring that Nigerians move closer to living the dream of owning a property, which is part of human’s safety and security needs.