•It is almost impossible to meet manufacturers’ demand, experts say
The Federal Government, yesterday, announced a plan to prioritize road repairs and explore solutions for reducing the cost of energy and import duties to crash the prices of cement across the country.
This resolution contained in a joint communiqué was part of the agreement reached at a meeting between government officials and leading cement producers on Monday evening in Abuja.
Minister of Works, David Umahi, alongside the Minister of Trade and Investment, Doris Uzoka-Anite as well as representatives of three major cement companies – Dangote, BUA and Lafarge Plc signed the communiqué.
The document said the government is aware of the difficulties faced by the manufacturers such as the cost of energy, skyrocketing import duties on spare parts, poor road infrastructure, foreign exchange rate crisis and the smuggling of cement to neighbouring countries.
The meeting ended with a resolution that the Federal Ministry of Industry, Trade and Investment would pursue remedies under President Bola Tinubu over gas pricing and import duties.
Also, the Federal Ministry of Works is to focus on road maintenance, especially near the sites of the cement manufacturers. To address the problem of cement smuggling, the Federal Ministry of Industry, Trade and Investment said it would strengthen discussion with the Office of the National Security Adviser to devise strategies for stopping the challenge.
However, pioneer national president of the Building Collapse Prevention Guild (BCPG) and immediate past national president of the Nigerian Institute of Builders (NIoB), Kunle Awobodu, said it would be next to impossibility for the manufacturers’ demands to be met except the FG intends to introduce subsidy for the manufacturers and give them FX at special rates.
He regretted that manufacturers had cried out last December and warned of the imminent increase in cement prices, urging the government to dialogue with the manufacturers while addressing the challenges.
He added that the dollar rate is determined by market forces and if the manufacturers are calling for a sharp reduction, it would mean the government would have to give them a subsidised rate.
“Energy is crucial in cement production and the only way they as well as other manufacturers can get it cheaper is if it is subsidised. The roads where most of the cement companies are located nationally are in bad shape and cannot be fixed immediately. All these factors add to the cost and show why the government may not be able to meet their demands any time soon, meaning cement will still be expensive,” he said.
He urged the government to revisit the 2002 cement backward integration policy and adapt some solutions from the roadmap.
“The N7000 or N8000 the manufacturers are proposing is still very much on the high side and would not get to the end user at that price. Government must fix the issues across the manufacturing value chain and not just cement as soon as possible,” he said.
Economist and Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said cement pricing is a purely business decision and the government cannot dictate what manufacturers should sell. Adding that the government can only persuade businesses to be compassionate, he said that in the end, the cost of doing business will determine pricing.
The cement manufacturers and Federal government had set the price range for a 50kg bag of cement at N7,000 to N8,000 across various locations in the country. However, the manufacturers said that deviation from the current market rates would be contingent upon the government’s commitment to addressing challenges within the sector.
