Anticipation that cement price will crash, following a directive by President Goodluck Jonathan to the operatives to reduce cost of the products may have hit the rocks as Dangote Cement Plc, a major manufacturer, has unveiled a new price regime review, which pegged its prices to ₦1,600 per 50 kilogramme bag.
In the new prices, the company’s ex-factory prices remain unchanged while depot prices in Abuja and surrounding have been fixed at ₦1,600. The company was silent on prices at its depots in the South East and South West, where prospective homeowners and developers are facing hard times in the procurement of cement products. Last week, for instance, prices of a 50 kilogramme bag stood at between ₦1,850 and ₦2,000.
Similarly, the new rule allows only bulk buyers to buy a minimum of 600 bags from the depots.
The latest development may have confirmed that predictions of professionals in the built environment that whatever initiative that would be carried by the cement manufacturers would be cosmetic and a long term measure should be adopted by government to assuage the plights of homebuilders.
The Guardian learnt that Dangote dictates the pace of the market and recent review of prices may not make any appreciable impact in the building materials market .
According to the company, “with Kaduna refinery back in production and LPFO supply now restored to our BCC plant at Gboko, the plant is now producing at full capacity. Our natural gas fired plant at Obajana is also in full production with an average production of over 500 trailers of cement daily.
“Our new plant at Ibeshe, Ogun State, with six million metrictons per annum capacityis in the final stages of completion and commissioning will commence in August 2011. The third line in Obajana, is expected to commence production by the last quarter of the year and will increase the total capacity of Obajana plant to 10 million metric tons per annum, which will translate to 1,000 trailer loads of cement daily.”
Meanwhile, Cement Manufacturers Association of Nigeria (CMAN) had reportedly said that the price of cement would go down before the middle of June. Joseph Makanju, chairman of CMAN, gave the assurance at a press briefing in Lagos, adding that the association was fine-tuning major processes that would lead to the price reduction.
Makanju said that the association would ensure that it met the desire of President Goodluck Jonathan on the reduction in price of cement. He listed the measures that would bring about the price reduction to include increase in production and flooding of the market with the product as soon as possible.
“We, on our part have taken measures to import more cement into the country. One of CMAN member firm, Dangote Group, has imported 500 trucks to reduce the haulage challenges being faced by dealers. We have to discuss with the dealers because they have a major role to play in cement pricing.
“The major challenge is the role of the middlemen that increase the price excessively from the factory price of between N1, 550 and ₦1,700 to the current market price. As at today, the factory price is still between ₦1,500 and ₦1,550 per bag of cement. This is because an extensive analysis of the operational and market performances of the product did not show any significant increase in demand. The findings was carried out in four plants which include Dangote Cement Plc, Askaka Cement plant, Lafarge Wapco Cement Plc, and one other plant,” he said.
Mr Makanju said that transporters also capitalised on the hike in the price of diesel to increase the cost of haulage astronomically.
He revealed that the backward integration policy introduced by the Federal Government in 2002 was working because it had attracted huge investments to the sector. According to him, Nigeria was barely producing two million tonnes of cement in 2002 before the introduction of the policy, but it now produces about 17.5 million tonnes annually.
Source: The Guardian