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Dangote blames retailers for high cost of cement

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Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, has expressed surprise that its cement products are sold at an higher price in the Nigerian market.

Edwin said contrary to claims that the company’s cement product is cheaper in Ghana and Zambia, he revealed that Nigeria’s price is lower.

He said Dangote Cement sells at an affordable price to retailers who decide the final product cost.

The director said a bag of cement from its factories and plants across Nigeria is N2,450 in Obajana and Gboko, and N2,510 in Ibese inclusive of VAT, as at April 12, 2021.

When compared to its other African market, in dollar terms, Dangote’s cement sells for $5.1, including VAT in Nigeria, but sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

Explaining further, Edwin stated that the company has no control over the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.

Read also: Dangote responds to BUA’s price fixing allegations

Dangote Cement owns 60 percent of market value, while BUA, Lafarge Cement, others have 40 percent.

“Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity.

“To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings. We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

He said: “Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.

“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly. We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement.

“Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far” he said.

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