3 months ago
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- Lawmakers have invited cement producers in Nigeria to justify the increase in prices to N10,000 or more per bag
- Aliko Dangote of Dangote Cement, Abdulsamad Rabiu of BUA Cement, and representatives from Lafarge Cement are the three major producers in Nigeria
- A representative from Dangote Cement presented an explanation for the price adjustment at the meeting
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The House of Representatives Joint Committee investigating the increase in cement prices in the country has issued a directive to manufacturers, including Dangote Cement, BUA Cement, and Lafarge Africa.
Jonathan Gaza, the Chairman of the Committee, said that the manufacturers must provide a detailed breakdown of production costs to justify the recent increase in bag cement prices.
Source: Getty Images
The lawmakers noted that although cement prices in the North and some other states have reduced to N8,000 after selling for as high as N13,000 to N15,000, depending on the brand, residents in some states still pay as much as N10,000 per bag.
Reps demand an explanation for cement prices
He stressed that the committee needed the information to have a clear idea of the challenges faced by the manufacturers and why it is important to increase cement prices, Newstelegraph reports.
Gaza requested data on production costs from 2020 to the present and details on the daily consumption of materials such as coal, gas, gypsum, limestone, clay, and laterite, as well as the average daily production of cement during this period.
Additionally, the companies must provide information on imported components used in cement production and their associated costs from 2020 to date.
Gaza stated:
"We require comprehensive documentation from these companies to understand their day-to-day production costs and accurately determine the cost of producing a bag of cement."Dangote cement provides an explanation to cement prices
In response, Arvind Pathak, Group Managing Director of Dangote Cement, revealed that 95% of the company’s production costs are tied to imports or foreign exchange.
Pathak highlighted dramatic increases in the prices of key materials, including gas, diesel, gypsum, imported coal, spare parts, new trucks, tyres, and petrol, with price hikes ranging from 100% to 333%.
Pathak explained that the company often pays in dollars for certain contracts to secure gas and explosives. Due to insufficient forex provisions from the Central Bank of Nigeria, Dangote Cement also sources foreign exchange from the parallel market.
Logistics issues, including poor road conditions, have led to increased delivery times and maintenance costs for trucks.
Pathak noted that the lack of adequate forex for trade obligations has resulted in annual losses of N150 billion and a 30% interest rate on loans.
He said:
"Between May 2023 and June 2024, the naira devalued by over 220%, compounding challenges like insecurity and unreliable power supply."The cost of building materials, including reinforcement, granite, and aluminium windows, has surged by 177% to 283%, while cement prices have risen by 166% during the same period."States with lowest cement prices
Earlier Legit.ng reported that the federal government's meeting with major cement producers, Nigerians are still unhappy about the high cost of cement.
The cement producers agreed to reduce prices to N7,000 to N8,000 per bag at the meeting.
Despite government intervention, checks show that most retailers in Lagos and Ogun States sell bags at N10,500 and N14,000.
Source: Legit.ng
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