Dangote: Covid 19 crisis cause of high cost of cement
The management of Dangote Cement Plc. has attributed the high cost of cement in Nigeria to the global rise in demand for cement as a result of the COVID-19 crisis.
The company however said
the price of a bag of cement from its factories and plants in Obajana and Gboko is N2,450, and N2,510 at Ibese.
The company’s Group Executive Director in charge of Strategy, Portfolio Development, and Capital Projects, Mr Devakumar Edwin, stated this in a statement made available to newsmen on Tuesday.
He said that these were the prices of cement which included the Value Added Tax (VAT) as of April 12.
Contrary to the company’s statement however, the prices of cement range from N3,300 to N3,500 in Lagos and Ogun states since March 2021.
“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 said that the company had also reactivated its 4.5million ton capacity Gboko Plant which was closed down four years ago and the company is running it at a higher cost.
“This is all in a bid to guarantee that we meet demands and keep the price of cement within control in the country.
“Over the past 15 months, our 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.
He said that though, the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the open market.