A 50kg bag of cement still sells for an average of N1,750 in Lagos, despite last week’s announcement of reduction of price to N1000 by some manufacturers.
Investigation also revealed that it could be higher in some states, where distance and other logistic issues affect prices negatively.
Dangote and the BUA groups had announced a price slash to N1000, prompting mixed reactions, even as cement prices remain unchanged.
Giving reasons for this, Mr. Samuel Oluwatosin, who sells Dangote Cement at N1,750, revealed that the new price, as announced by the manufacturers, is yet to take effect. Besides, he still had old stock and could not have sold them at a loss.
As at Friday, Mr. Aliu Tiobaoluwanimi, a cement dealer at the Oshodi market, was selling 50kg bag of cement at N1,850. Although, according to him, distributors would be willing to sell at the newly prescribed price, they would only do so when their old stock is exhausted.
In Bariga, Ebenezer Osas, another cement dealer, complained that sales have been dull since the announcement. “Buyers expect to buy at the announced rate when sellers have not gotten it at that rate,” he said.
Expressing deep suspicion that the price reduction could serve some political interests ahead of 2015 elections, Osas said he remembered that the Federal Government, last year, gave cement manufacturers an ultimatum to reduce prices but they defied the order. For him, “ it is a welcome idea but no price is stable in Nigeria.”
An interesting twist to the story is the view expressed by Mr. Emmanuel Chibueze, a contractor who believes that Nigerians are probably being ripped of.
In his words: “If the cement can be sold at N1,000 without recording any loss, why is the announcement coming this time?” According to him, it shows that the prices of cement are not determined by the forces of demand and supply, but by manufacturers when they deem it fit; hence a price regulatory body is needed for the cement industry.
The Guardian can authoritatively report that, as at Friday, the cheapest brand of cement was Dangote, as a 50kg bag sold at N1,750; Elephant Cement sold at N1,850, while price of BUA cement also stood within that range.
In the bid to reduce housing deficit in Nigeria, Dangote Cement Plc announced a reduction in the price of cement, which fixed 32.5 cement grade at N1,000 and 42.5grade to sell as low as N1,150, exclusive of value added tax (VAT).
The Group Managing Director, Dangote cement, Mr. Devakumar Edwin, said the price slash is in line with the organisation’s commitment to support the Federal Government’s effort to reduce housing deficit and also make building materials affordable.
Alhaji Abdulsamad Rabiu (chairman, BUA Group) threw his weight behind the 40 percent price reduction, barely a day after the announcement by Dangote Cement.
He said he had always been concerned about the high cost of cement and had advocated the reduction so that more Nigerians could own houses.
He further declared that all BUA plants had been directed to implement the new price, believing more could still be done to further bring down the price.
The cement industry has been fraught with price controversy. Recall that the federal government had ordered a reduction in price on May 16, 2011, a declaration that was utterly ignored.
Industry experts have expressed concerns over unjustifiable hike in prices of cement not minding the backward integration policy of government.
This background explains the prevailing apathy of the people over cement slash in prices. Concerns are rife that implementing the new price regime as announced by the manufacturers might be a herculean task.
The price reduction is coming on the heels of ongoing debate over standardisation of cement quality as being championed by the Standards Organisation of Nigeria (SON). Some stakeholders have warned against policies that could fester monopoly.
Barely a month ago, a group under the aegis of the Alliance Against Monopoly (AAM), held a one-day summit at the Sheraton Lagos Hotel and Towers, Ikeja, underscoring the essence of best practices in the construction industry.
In a communiqué co-signed by Mazi Omife I. Omife (National President) and Dr. Ike Ikegbunam (General Secretary), the group rued what it referred to as the obvious disruptive and monopolistic inclinations of the SON’s policies.
“The AAM supports well-meaning moves to stop building collapse by those in authority as long as it is transparent. The group also believes that the crisis in the cement industry ignited by the SON’s new self-contracting policy on cement is an entrepreneurial war being waged by unforeseen forces of economic domination against Nigerian citizens,” according to the communique.
According to the group, the policy was not generated according to the procedure laid down by SON but was imposed by someone from the outside.
“The new standard has not been made in accordance with section 12 of the Act and does not qualify as a national industrial standard, neither is it binding on anyone,” the group said.
The SON had itself certified 32.5mpa grade cement and defended the grade at a public hearing saying it is suitable for light construction, work and block making.
The only company that championed the banning of 32.5mpa grade, which will also benefit from it supports the use in South Africa through an organisation (The Sephaku Cement Ltd) where it has achieved near monopoly.
The Sephaku agrees 32.5mpa grade has the same early strength as the 42.5mpa, which is cost effective and good for use in a wide range of construction purposes.
The AAM maintained that it would resist attempts by “hired forces” to colonise the economy through monopoly and also believes building collapse can stop when all stakeholders and relevant government organs join hands to entrench best practices in the industry.
In the final analysis, it is hoped that the price reduction by the two cement giants will force other manufacturers to follow suit so as to remain competitive.
But until that happens, cement consumers — block moulders, builders, and contractors — eagerly await the Eldorado of a new affordable price regime in line with the so-called ‘ cement armada’ in local supply.
Culled from The Guardian.