Abdul Samad Rabiu, Chairman of BUA Cement, has attributed the soaring cost of cement in Nigeria to the ongoing naira devaluation and the practices of dealers.
Speaking at the company’s 8th annual general meeting in Abuja, Rabiu highlighted that efforts to reduce cement prices from N4,500 to N3,500 per bag last year were thwarted by these factors.
Rabiu revealed that BUA Cement sold over a million tons of cement to dealers at N3,500 per bag, aiming to pass these savings onto consumers. However, dealers have instead sold the cement at prices ranging from N7,000 to N8,000 per bag, exploiting the high margin and leaving the company powerless to control market prices.
The chairman noted that the devaluation of the naira, coupled with the removal of fuel subsidies, made the company’s plan to reduce cement prices unsustainable. “Dealers capitalized on our pricing policy, charging customers even more than what we sold to them,” Rabiu said.
Despite these challenges, BUA Cement has continued to subsidize prices. Rabiu explained that the current price of cement, though higher than last year, has only increased by 50% relative to the dollar’s rise. He emphasized that if the exchange rate had been applied directly to cement prices, they would be around N10,000 per bag.
Rabiu also pointed out that energy costs, which are heavily influenced by dollar-denominated prices, are a significant factor in cement production expenses. The company’s gas purchases for powering its plants are priced in dollars, adding to the financial strain.
In summary, while BUA Cement strives to keep prices manageable, external economic pressures and dealer practices continue to impact the cost of cement in Nigeria.
