Cement Giants Dangote, Bua, and Lafarge Explain Inability to Lower Prices Below N7,000

Cement manufacturers have attributed the recent spike in cement prices across the country to a significant increase in their operating costs. However, following a meeting convened by the Minister of Works, David Umahi, alongside his counterparts from the Ministry of Industry, Trade, and Investment, Doris Uzoka-Anite, with representatives from major cement companies like Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc, a decision has been reached to alleviate the burden on consumers.

During the meeting, which lasted nearly three hours, the Works Minister disclosed that the manufacturers clarified the reasons behind the recent price surge and the challenges preventing an immediate reduction in prices. Factors such as the high cost of gas, import duties, poor road infrastructure, and the unfavorable foreign exchange rate were cited as significant contributors to the cost increase.

Kabir Rabiu, the Executive Director of BUA, emphasized the constraints faced by the manufacturers, particularly regarding the escalating cost of energy, notably gas. He outlined the trajectory of gas prices over the past year, indicating a substantial increase, and highlighted the forthcoming increase in cement supply, which is expected to alleviate the pricing pressure once it reaches the market.

Rabiu also pointed out the imbalance between demand and supply, exacerbated by production issues in some manufacturing plants, further driving up prices, particularly during peak demand seasons. He underscored the role of smuggling in exacerbating the scarcity of cement, with neighboring countries like Cameroon, where cement is significantly pricier, serving as lucrative markets for cross-border smuggling.

Arvind Pathak, the Group Managing Director/Chief Executive Officer of Dangote Cement Plc, echoed the sentiments expressed by Rabiu, emphasizing the impact of import duties and foreign exchange fluctuations on production costs.

As a resolution, it was agreed that the cement prices nationwide would be adjusted to range between N7,000 and N8,000 per 50kg bag, contingent on the location. Additionally, a commitment was made to establish a price monitoring mechanism to ensure compliance and to sanction any distributors or retailers found violating the agreed-upon prices. The government pledged to address the underlying challenges faced by the manufacturers, including gas supply, import duties, smuggling, and infrastructural improvements. Furthermore, there are plans to encourage the emergence of additional cement manufacturers to augment the existing ones, thereby enhancing market competition and potentially mitigating price fluctuations in the future.