…Retain cement price at 15-month level
By Oludare Mayowa
Dangote Cement Plc on Monday said it has suspended exports of cement from Nigeria from its Apapa export terminal in the wake of surge in demand for the product to ensure that it meet local demands.
The company said it has also reactivated the 4.5 million tonnes capacity Gboko Plant which was closed four years ago and run it at a higher cost all in a bid to guarantee availability of the product in the country and ensure price stability.
Speaking in Lagos at a press briefing, Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin said demand for cement has risen globally, especially Nigeria due to changes in monetary policy and low interest rate regime, which spurred development in the real estate sector.
“Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity.
“To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.
“We also had to reactivate our 4.5 million ton capacity Gboko Plant which was closed four years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”
He disclosed that the price of a bag of cement from its factories and plants across Nigeria as of April 12, 2021 is N2,450 in Obajana and Gboko, and N2,510 in Ibese inclusive of VAT.
According to him, a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.
Edwin debunked claimed in some quarters that price of cement is higher in Nigeria than other part of African countries.
He said the company has not increased the ex-factory price of its product since December 2019 despite rising cost of production.
“Over the past 15 months, our production costs have gone up significantly. About 50 percent of our costs are linked to the US dollar so the cost of critical components like: gas, gypsum, bags, and spare parts have increased significantly due to devaluation of the Naira and VAT increase.
“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.
“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.
“We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far” he said.
He said the company has maintained the same price in the past 15 months to ensure that Nigerians benefit from the gains of Backward Integration policy of the Federal Government,” Edwin told Journalists in Lagos.
He said that though the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the market.
He advised that it is important to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market.
He, therefore, frowned at intentional misinformation or demarketing, allegedly sponsored by some individuals, that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians. He described the allegation as false, misleading, and unfounded,
Edwin share with journalists the copies of invoices from Nigeria and some other African countries (Cameroun, Ghana, Sierra Leone, Zambia) to drive home his point that cement price remain cheaper in Nigeria than some specific African nations.
Edwin further explained that while Dangote cement has 60 percent share of the market, other cement firms share among themselves the remaining 40 percent.
DCP has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.