Jolted by the order from the Presidency to reduce the cost price of cement in the country, manufacturers may be compelled to fashion out ways to comply with the directive
President Goodluck Jonathan may have been reading the mind of Nigerians when he announced, last week, that there must be a considerable slash in the price of cement. He was addressing manufacturers of cement at a meeting in Abuja, the Federal Capital Territory, FCT. He gave the manufacturers just one month to make sure cement price comes down and be readily available in the market. The price of cement in Nigeria is the highest in African. At present, a 50kilogramme, kg, of cement sells for between N2,300 and N2,700 depending on the area of purchase. But in Ghana, the same 50kg of cement costs 11 Cedis 50 pesewa, which amounts to N1,150. In Cotonou, Republic of Benin, it sells for $10, the equivalent of about N1,520. The prices of cement in these countries are not different from what obtains in Senegal and Togo.
The high cost of cement has generated angst within the Nigerian Institute of Architects, NIA, which tends to be championing the cause of a reduction in the price of the product. According to the body, the high cost of cement is damaging to the building sector. “We wish to state that the cost of construction activities, which is highly dependent on cement in Nigeria even prior to the recent hike from N1,450 to N2,300, is expensive enough. With the recent turn of events, it will not be inappropriate to say there is the distinct possibility that the price increase will be damaging to the industry,” Olatunji Bolu, NIA president said. Increase in the price of cement has triggered off higher construction costs in the country. The concern of architects is that the high cost of cement could force people who are engaged in construction to resort to using poor quality products to cut cost. Such situations had in the past given rise to cases of collapsed buildings in parts of the country.
The President must have been moved by the complaints of Nigerians who are groaning under the weight of the high cost of cement. Marketers of the product are also not left out, as they complain of scarcity of the product. Mulikat Komolafe, a marketer says, “Since the beginning of the year, cement price has not been the same. It keeps increasing and it is a cause for worry, since we don’t have any other business than this one. The product is scarce in the cement companies, and because of that, the price is high”.
But the manufacturers tend to justify the high cost. “We are doing all we can to try to bring down the cost of cement, but there are challenges to be surmounted”, says Joseph Makoju, chairman, Cement Manufacturers Association of Nigeria, CMAN. He was referring to the scarcity of Low Pour Fuel Oil, LPFO, a major ingredient used in the manufacturing of cement as well as the high cost of transporting finished products to different parts of the country. Aliko Dangote, president, Dangote Industries Limited, put the challenges more succinctly when, during the meeting, he explained to the President that the major problems facing cement manufacturers are the scarcity of LPFO and loss of his company’s trucks, numbering about 6,000. He also cited the post-election crisis that rocked parts of the northern as one of the reasons why cement is scarce, and where available, costly.
In the same vein, Abdulsamad Rabiu, chairman, BUA, another leading cement producer, said that some of the challenges that caused increase in cement price were being addressed. Some of which, include the closure of Kaduna Refinery and cement companies based in the southern parts of the country as a result of the crisis in the North.
In response to the complaint of scarcity of LPFO and as a quick step towards assisting the manufacturers the federal government promised to bring down the cost of transportation by getting the Nigerian National Petroleum Corporation to supply fuel directly to the cement manufacturers.
Whether government can compel the manufacturers to bring down the cost of the product within the next one month remains to be seen.