Production costs, not concrete roads, raising cement prices – Nigerian govt

The Federal Government, on Wednesday, explained that the rising cost of production is responsible for the recent cement price hike and not its concrete road policy.

It also said that its insistence on concrete roads will not phase out traditional asphalt roads but is only an alternative for sites with high water tables and poor conditions.

The Minister of Works, David Umahi said this while briefing State House correspondents after Wednesday’s Federal Executive Council meeting at the Aso Rock Villa, Abuja.

“This assertion is highly misplaced because the policy has not even taken off,” Umahi said.

His remarks followed warnings by the Cement Producers Association of Nigeria that the FG’s plan to introduce concrete roads will raise the price of cement from N5,600 to N9,000 per bag.

Also on Wednesday, the House of Representatives invited top manufacturers, Aliko Dangote and Rabiu Abdulsamad, among others for discussions on the high cost of the product.

The House’s resolution was a sequel to the adoption of a motion titled “Arbitrary increase in the price of cement by manufacturers of cement in Nigeria,” moved by a member representing Karu/Keffi/Kokona Federal Constituency, Nasarawa State, Mr Gaza Gbefwi, and his counterpart representing Shomolu Federal Constituency, Lagos State, Ademorin Kuye, during plenary on Wednesday.

Speaking on the issue, Umahi cited recently released documents showing that Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc spent N598.14bn on power during the full year ended December 31, 2023.

He explained: “I just got a document this morning where three companies producing cement, Dangote, BUA and Lafarge, said in 2023, the total cost of their gas rose by over 42 per cent. So, if the cost of their gas rose by 42 per cent and then the import duty exchange rate has also gone up, it is expected that the cost of cement would go up.

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“But Mr. President has discussed with them and I think there are a couple of incentives being made available to them which should reduce the cost of cement.

”In Sokoto, where I visited recently, the BUA Executive Director said that the ex-factory was N6000. And that was down from N8000. We are getting there because Mr. President has directed them to reduce the price and they have to comply and I think Mr President has also offered them some incentives to them.

“So it’s not because we are going from asphalt to concrete. And we are not totally leaving the asphalt. It is just an alternative, especially where we have a very high water table and then a very poor sight condition.”

The minister also disclosed the council’s response to the memoranda he presented at the meeting.

This includes the approval of an additional N757bn as augmentation for the dualisation of the 489km Obajana-Benin Road, N2.23bn for the Isheri-Ogun Road and N114bn for Outer Marina shoreline protection.

“Today we’ve got augmentation approved for Obajana in Lokoja to Benin Road, a total of 244km and 489km dualized. Recall that in 2012, this project was awarded to four contractors: CGC, Mothercat, Dantata & Sawoe and RCC at a total cost of N122bn, and that was for light rehabilitation.

“Around 2018, the past administration reviewed the project and dualised it and that’s why you have a total of 489km and then now got ‘No Objection’ from BPP. When I came on board in August, we were supposed to present the no-objection to FEC in line with due process and we decided to review the project, one, to determine whether the dualisation was desirable in view of the economic challenges and two, to see the texture of the soil and what to do.

“So we had to restore the project now, but we didn’t increase the cost. We got approval for argumentation from N122bn to N897bn. The contractors were off-site because they would not be working and they would not be paid based on the new basic rate. So we got them back to the site and Today we got approval.”

The Council also approved N2.23bn for the Federal Roads Maintenance Agency for the rehabilitation of the road from Isheri North to Ogun state.

“Now, under FERMA, we got approval for the construction of Isheri north, Lagos route, which is to connect Ogun state. This is an alternative route to Lagos – Shagamu Road and we’re going to toll this Lagos-Shagamu when completed. But by law, you only toll a federal road when you have an alternative.

“This approval of about N2.23bn to connect Isheri North to Ogun state. It is a breakthrough that has freed the Lagos-Shagamu for tolling,” he revealed.

Explaining the Council’s approval for the N114bn Outer Marina shoreline protection, Umahi said: “The shore protection was done over 50 years back with sheet piles and we had to take the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on a tour with Julius Berger through the entire shoreline of 3.92km.

“We took the tour with Julius Berger, CCECC, CBC and BuildWell, and demanded for them to inspect and then give us their proposal. Only BuildWell and CCECC brought their proposals.

“Whereas CCECC was quoting on 3.2km at N134bn, BuildWell was quoting on 3.9km at N114bn. We sent the two to BPP and BPP found merit in BuildWell because of cost and, of course latest technology in doing shore protection using interlocking concrete, which will not be subject to rusting. So we got approval for Build Well in the sum up N114bn.”

According to Umahi, the shoreline protection project was necessary given its proximity to the recently inaugurated Red Line and other existing structures in the area. He added that his ministry sought to leverage the low-water levels of the dry season to drive piles down the shore.

December 31, 2023

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