House C’ttee: Cement Manufacturers Must Provide Documentation Of Cost Production
Due to the investigation of the House of Representatives Joint Committee regarding the arbitrary increase in cement prices, major manufacturers in the industry must provide documents detailing their cost of production.
This request aims to justify the current market price of the commodity.
The Committee criticized the Federal Competition Consumer Protection Commission (FCCPC) for its laxity and inefficiency, which have significantly contributed to the high cost of commodities.
This was as the Group Managing Director (GMD) of Dangote Cement Company, Mr. Arvind Pathack, and the Managing Director of Lafarge Cement, Mr. Ibrahim Aminu, were interrogated by a joint panel chaired by Hon. Jonathan Gaza on Friday.
“We need them to provide all the documents we requested to verify their daily production. This will give us a clear understanding of the actual cost of producing a bag of cement,” said Gaza.
The committee resolved to visit the production plants of the companies after reviewing their financial records. This initiative aims to determine the cost of production and establish a fair price for cement accessible to all Nigerians.
Gaza assured that the efforts of the Committee would see the reduction of the price of cement for the benefit of Nigerians as soon as possible.
He said that the committee is interested in the cost of production from 2020 to date that justified the current price of cement which is over N10,000 in most parts of the country.
He said that the companies should give its average daily consumption of coal, gas, gypsum, limestone, clay, laterite and the average daily production of cement from 2020 to date.
Gaza said that the companies should provide details of all imported components for the production of cement and their prices from 2020 to date.
The lawmaker said that the companies should also provide details of local components for the production of cement and their prices in naira and dollars if any in the period under review.
He said that the companies should provide a summary of the monthly prices and quantity of cement produced from 2019 to date as well as their audited accounts of the company, bills of laden and duties paid to customs within the period under review.
Gaza also said that the companies should provide details of tax waivers and other incentives enjoyed plus gas and explosives contract details.
The Committee also frowned at excuses of the high cost of foreign exchange by the companies as one of the reasons for the increasing price of cement.
The members of the Committee said this was not tenable as most of the materials for production of cement are sourced locally.
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A member of the Committee, Hon Dabo Ismail, said that Dangote Cement Company had continued to make increasing profits in the country despite being able to source most of its raw materials locally.
He said that in 2022, the company declared a profit of N524 billion, N553 billion in 2023 and have so far made N166.4 billion in 2024.
The lawmaker said that there is no reason why the price of cement will keep rising in the market to the detriment of Nigerians while producers are smiling to the banks.
Earlier, the Group Managing Director (GMD) of Dangote Cement Company, Mr Arvind Pathack said that 95 per cent of production cost are either imported or linked to foreign exchange.
He explained that there had been between 100 to 333 per cent increase in the price of major cement input materials like gas, AGO, gypsum, imported coal, spare parts, new trucks, tyres, petrol among others.
Pathack said that the company is made to pay for some of its contracts in dollars to access gas and explosives for production .
He said the provision made by the Central Bank of Nigeria (CBN) was not enough to meet demand so they engage in international sales also sourced from the parallel market.
He said logistics issues such as deplorable state of key roads, creates several issues including longer time to deliver, increase in truck maintenance and delivery cost.
The GMD explained that lack of sufficient forex to settle trade obligations had resulted in huge forex losses to a tone of N150 billion a per annum while paying 30 per cent interest rate on loans.
He said between May 2023 and June 2024, there has been over 220 per cent devaluation of the Naira among many other challenges like insecurity and public power supply.
Pathack said that the cost of building materials like reinforcement, granite and aluminium window had increased by 177 per cent to 283 per cent while cement had increased by 166 per cent between 2023 and 2024.
He said that cement was being sold at an average cost of 7,200 saying that any price over N10,000 was the handwork of retailers which the company had no control over.
According to him, when converted to dollars a bag of cement is said at $7.8 dollars in Benin, $6.6 in Togo, $7.8 in Ghana, $4.4 in India while that of Nigeria is $4.43, making it one of the cheapest in Africa.
The committee admonished the companies to look into their policy and operations with a view to reduce the price of cement in the country.
Gaza blamed high price of the commodity on the inaction of Federal Competition Consumer Protection Commission (FCCPC).
He said that as an agency responsible for the protection of consumers, they failed to protect Nigerians against middlemen who sold the commodity for as high as N14,000 after purchasing it for N6,000 at the factory.
“We are extremely hopeful that this engagement will lead to a reduction in the price of cement.
“The FCCPC has been neglectful in fulfilling its functions. Their inactivity and lack of responsiveness to price regulation have significantly contributed to the current economic challenges facing Nigeria.”