Dangote Cement Plc has explained why cement price is high in Nigeria.
In a statement by Devakumar Edwin, the company’s Group Executive Director, Strategy, Portfolio Developmen and Capital Projects, said prices of a bag of cement from its factories and plants at Obajana and Gboko is N2,450 and N2,510 in Ibese. He said that these are the prices of cement which included the Value Added Tax (VAT) as of April 12.
Edwin said the high cost of cement is down to a combination of monetary policy changes and low returns from the capital market.
“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 demands, we had to suspend exports from our recently inaugurated export terminals, thereby foregoing dollar earnings,” he said.
He revealed that in a bid to guarantee that the company meets demands as well as keep prices under control, it has had to reactivate its 4.5 million ton capacity Gboko Plant which was closed down four years ago, adding that production costs have gone up significantly.
“About 50 per cent of our costs are linked to the USD, so the costs of critical components such as gas, gypsum, bags, and spare parts; have increased significantly due to the devaluation of the Naira and VAT increase.
“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly,” he added.
He said that the company had only adjusted its transport rates to account for higher costs of diesel, spare parts, tyres, and trucks’ replacement.
According to him, the clarifications become necessary in view of the recent insinuations that the company sells cement in Nigeria at higher prices relative to how much it sells it in other countries, particularly in Ghana and in Zambia.
“This allegation is false, misleading, and unfounded.
“While a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes,” Edwin explained.