The joint committee of the House of Representatives, investigating the ongoing increase in cement prices, has called on major industry producers to submit documents detailing their production costs. This request aims to justify the current market prices.
The committee plans to visit the production plants of these companies after reviewing their financial records to determine a fair cement price for all Nigerians. Chairman Jonathan Gaza made this demand on Friday during a public hearing, questioning Dangote Cement Company and Lafarge Africa Plc in Abuja.
Gaza expressed interest in the production costs from 2020 to date, seeking to understand why cement prices have exceeded N10,000 in many parts of the country. He asked the companies to provide their average daily consumption of coal, gas, gypsum, limestone, clay, laterite, and their average daily cement production from 2020 to date.
The committee also requested details on all imported components for cement production and their prices from 2020 to date, along with local component prices in naira and dollars. Additionally, the companies were asked to summarize monthly prices and quantities of cement produced from 2019 to date, including their audited accounts, bills of lading, and duties paid to customs during the review period.
Gaza also sought information on tax waivers, other incentives received, and gas and explosives contract details. Committee member Dabo Ismail (APC-Bauchi State) noted that despite sourcing most raw materials locally, Dangote Cement Company has continued to see increasing profits, declaring N524 billion in 2022, N553 billion in 2023, and N166.4 billion in 2024. He questioned why cement prices keep rising while producers profit.
Dangote Cement Company’s Group Managing Director, Arvind Pathack, explained that 95 percent of production costs are either imported or linked to foreign exchange. He cited significant price increases for major input materials like gas, AGO, gypsum, imported coal, spare parts, new trucks, and tyres. Pathack mentioned that the company pays in dollars for some contracts to access gas and explosives.
Logistics issues, such as poor road conditions, contribute to longer delivery times and increased truck maintenance and delivery costs. Pathack highlighted a lack of sufficient foreign exchange to settle trade obligations, resulting in forex losses of N150 billion per annum and a 30 percent interest rate on loans. He also pointed out a 220 percent devaluation of the naira from May 2023 to June 2024, along with challenges like insecurity and unreliable public power supply.
Pathack noted that building material costs have risen significantly, with cement prices increasing by 166 percent between 2023 and 2024. He stated that cement is sold at an average cost of N7,200, with any price over N10,000 attributed to retailers beyond the company’s control. In comparison, a bag of cement costs $7.8 in Benin, $6.6 in Togo, $7.8 in Ghana, and $4.4 in India, while in Nigeria, it is $4.43, making it one of the cheapest in Africa.
The committee urged the companies to review their policies and operations to reduce cement prices. In an interview, the committee chairman expressed hope that this engagement would lead to lower cement prices, blaming the high costs on the Federal Competition Consumer Protection Commission’s inaction. Gaza criticized the agency for failing to protect consumers against middlemen who inflate cement prices after purchasing it at lower factory prices.
“We are extremely hopeful that this engagement will lead to a reduction in the price of cement. FCCPC has slept on their functions so far, their inactivity and non-responsiveness to price are what has put Nigeria where we are today,” Gaza stated.
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