Recently, the price of cement in Nigeria has risen sharply, with the price of each bag (50 kg) of cement reaching more than 10000 naira (1 RMB ≈ 200 naira), which is more than 4000 naira higher than the price of cement in previous months.
As Nigerians bemoan the soaring price of cement, Bloomberg's real-time list of the world's billionaires shows that Aliko Dangote, the founder of the country's largest cement company, saw his wealth soar by as much as $144 million in a single day on February 16.
Aliko Dangote's
high cement prices have seriously affected local infrastructure and housing construction in Nigeria, which has naturally attracted the attention of the Nigerian government. The Nigerian cement industry is dominated by three major players: Dangote Cement, BUA Group and Lafarge Africa Limited, which together account for 99% of all Nigerian cement production. On February 19, local time, the Nigerian Ministry of Engineering summoned the three companies because of the rise in cement prices, and the two sides held a meeting to discuss the recent cement price issues.
In the meeting, three cement companies said that the rise in operating costs was the main reason for the rise in cement prices. Cement cannot be sold for less than 7,000 naira/bag (50 kg) due to high energy costs, import duties, poor road network, smuggling and prevailing exchange rates, etc. Kabir Rabiu, executive director
of BUA, said the composition of energy costs rose from 39% to 60% this year. In addition, the huge gap between supply and demand is also an important reason for the price rise.
According to Kabir Rabiu, some cement factories are unable to produce for some reason, which reduces production. At the same time, the price of bagged cement in Cameroon is much higher, so illegal smuggling of cement is very attractive, which also leads to a shortage of cement supply in Nigeria. At present, the demand for cement is the highest in the country, and the trend of shortage of supply and demand will push up the price of cement. Although raw materials for cement production are local, cement production equipment, its parts and other necessities are still subject to import duties and foreign exchange, said Arvind Pathak, chief executive officer
of Dangote Cement.
At the meeting, the Nigerian government and manufacturers agreed that ideally the price of 50 kg of bagged cement should not exceed 7000-8000 naira everywhere. The participating cement companies have agreed to reduce the price of each bag (50 kg) of cement from N9,000-N15,000 to N7,000-N8,000, depending on local conditions.
Cement companies said they would agree to lower prices as long as the government addressed the problems they faced in energy, import taxes, smuggling and transportation. The government and cement companies will establish price monitoring mechanisms to ensure compliance, and companies will themselves sanction any distributor or retailer found to be defective.
