'We may open border for importation of cement,' FG warns Dangote, others

cement-bags

FILE PHOTO: Cement bags: prices soar

The Federal Government has warned manufacturers of cement in the country that it may allow mass importation of the product if they keep on increasing their prices indiscriminately.

Minister of Housing and Urban Development, Arc Ahmed Dangiwa, gave the warning at an emergency meeting held with cement and building materials manufacturers in Abuja on Tuesday.

The meeting was called following the astronomical rise in the price of cement in the past few days.

The manufacturers had jacked up the price of a bag of the product from about N5000 to N10,000 in the past two weeks.

At a meeting with Dave Umahi, the Minister of Works on Monday, the manufacturers had insisted that they could only reduce the price to N7000 if the government addressed some of their concerns, including the bad roads across the country and the increasing cost of gas.

They also complained about the declining value of the naira in relation to the dollar.

But while addressing the manufacturers on Tuesday, Dangiwa who called on the manufacturers to be more patriotic as he noted that raw materials for production of cement such as limestone, clay, silica sand, and gypsum are being sourced in the country and not being imported and as such, the should not be dollar-rated.

Dangiwa who said the increase in the price of cement is unacceptable and unreasonable also dismissed argument of the manufacturers that gas and high cost of importation of equipment were responsible for the price hike.

The minister faulted Cement Manufactures of Nigeria for not regulating the price of their product in the country.

This was in response to the claim by the the Executive Secretary of the Association, Salako James that the association does not discuss or determine the price of individual companies but are only made aware of prices from the market like every Nigerian.

“The challenges you speak of, many countries are facing the same challenges and some even worse than that but as patriotic citizens, we have to rally around whenever there is a crisis to change the situation.

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“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 percent 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. The demand and supply should be good for you because the government stopped the importation of cement, they stopped the importation in order 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.”

The Minister added that the ministry would set up a committee which would be comprised of representatives of each cement manufacturer in the country, its association, and the government to devise ways of resolving the problem of high price of cement in the country.

Speaking earlier, the Group Chief Commercial Officer, of Dangote Cement, Rabiu Umar said the high cost of gas and mining equipment were the reasons for the hike in cement price.

He added 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. So if 50 percent 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.

“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.

“On the issue of the gas, we also have the issue of the quantity of gas, we are not getting enough gas to produce enough to put into the market then we talk about the price and quality of the gas because they are all related.

He also noted that because of the devaluation of the naira, it is now a lot more attractive for people to come from neighbouring countries, with foreign exchange, buy cement and export it illegally across the border.

Umar added that this has increased demand and has reduced the available stock in the country.

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