Stop Using Forex Crisis As Excuse To Inflate Cement Prices, Housing Minister Warns Cement Manufacturers

Taiwo Ajayi
5 Min Read
L-R: Aliko Dangote, Founder, Dangote Cement; Abdulsamad Rabiu, Chairman of BUA Cement and Mr. Adebode Adefioye, Chairman Lafarge Africa Plc

The Minister of Housing and Urban Development, Ahmed Dangiwa, has warned cement manufacturers against taking undue advantage of the country’s current economic woes to increase the price of cement.

The minister expressed displeasure over the steady, recurring, and alarming increase in the prices of cement and other building materials, and accused the manufacturers of hiding behind unstable foreign exchange to inflict hardship on Nigerians.

Dangiwe’s assertion was made in Abuja at an emergency meeting held with cement and building materials manufacturers while responding to the manufacturer’s challenges.

The Group Chief Commercial Officer, of Dangote Cement, Rabiu Umar blamed the high cost of gas and mining equipment for the hike in cement price.

He said: “On the popular belief that most of the raw materials to produce cement are available locally, the reality is that it takes a lot of forex-related items to produce cement.

“Most of the cement plants in Nigeria use gas to produce, the gas is indexed to a dollar, and it is almost half of the total cost of production and we are not getting enough. So, if 50 per cent of your cost of production is indexed to the dollar it means if the dollar changes then your total expenditure would change in that direction.

READ ALSO: Umahi summons Dangote, BUA, Lafarge, others over rising cement prices

“For us to mine the limestone, one needs to import the mining equipment and the equipment is a substantial part of the cost of production, you have to invest in a lot of those equipment and invest in keeping them going.

“Regarding what is happening at the border towns because of the devaluation of the naira it has made it a lot more attractive for people to come from neighbouring countries, with foreign exchange, buy cement and export it illegally across the border, of course, what that has done is demand has increased meaning that available stock in the country has reduced and that has put a lot of pressure on the prices.”

READ ALSO: JUST IN: FG threatens to open of border for cement importation

In his response, Dagiwe said, “The gas price you spoke of, we know that we produce gas in the country. The only thing you can say is that maybe it is not enough. Even if you say about 50 per cent of your production cost is spent on gas prices, we still produce gas in Nigeria.

”It’s just that some of the manufacturers take advantage of the situation. As for the mining equipment that you mentioned, you buy equipment, and it takes years, and you are still using it.

“The time you bought it, maybe it was at a lower price, but because now the dollar is high, you are using it as an excuse. Honestly, we have to sit down and look at this critically also the demand and supply should be good for you because the government stopped the importation of cement, they stopped the importation to empower you to produce more.

“Otherwise, if the government opens the border for mass importation of cement, the price would crash but you would have no business to do and at the same time the employment generation would go down. So, these are the kinds of things you have to look at, the efforts of government in ensuring things go well.”

Recall that the Federal Ministry of Industry, Trade and Investment assured that plans to stop the smuggling of goods through borders are already in motion with the support of the National Security Adviser.

The development followed a closed-door meeting between the Minister of Works David Umahi; Dangote Cement PLC; BuA Cement PLC; Larfarge Africa PLC and the Cement Producers Association in Abuja.

The meeting came to a close with a unanimous agreement between the stakeholders to retail a bag of 50kg cement at N7,000 to N8,000.

This price is dependent on the city location in the country and progress will be reviewed 30 days from the agreement.

Source: Thewhistler

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