By Ayodele Johnson

In the absence of an imminent intervention by the Federal Government of Nigeria, cement sales would become an extra burden that a buyer has to deal with as soon as the wet season ends.

This is the wild projection of the Cement Producers Association of Nigeria (CPAN), contained in a statement jointly signed on Sunday, 24 September by National Chairman, Prince David Iweta and Chief Reagan Ufomba, the National Secretary.

At the moment, the average cost of cement in the country hovers around ₦5,000, but this can be cheaper. A new government in office seems focused on checking off milestones, including having more concrete roads built to improve durability, while aiming to construct homes to reduce the housing deficit.

All these factors, the CPAN believes, would add to the pressure on price.

“Our findings from various parts of the country show that cement sells for as high as ₦6,000 per bag in the rainy season. Our prediction is that it will sell for over ₦9,000 per bag in the Dry season, especially with the pronouncement of the Honourable Minister of Works on cement technology and the marching order on housing by Mr President if the government does not take proactive steps.

“While we commend the Honourable Minister’s position on cement-made roads, we warn of the dire consequences if the supply end is not properly addressed. In fact, it would amount to dereliction of duty not to intervene. And the time is now.

“To do otherwise is to continue in a worsening pipe dream that prices would suddenly drop on this essential input that will continue to drain the purse of Nigerians, render them homeless, encourage chaos between demand and supply, and worsen the infrastructure deficit it sets out to cure, and lead to an unprecedented price hike,” the association’s statement partly reads.

When President Bola Tinubu ended petrol subsidy payments in late May, it brought on polarised views. A segment of the Nigerian population wanted this to have been a gradual withdrawal instead of the quick burst that the country witnessed that immediately sent pump prices spiralling skywards.

To avoid a similar scenario with cement, the Cement Producers Association of Nigeria wants consideration for the side-by-side use of asphalt cement and newly introduced varieties.

It is a way to “a smooth transition that allows contractors to invest in commensurate and requisite equipment and retooling.”

Nigeria’s fast-rising population, based on 2023 data, has meant that as much as an estimated 28 million units is lacking in terms of housing deficit. Up to ₦21 trillion is needed to cover the gap, but mobilising the resources is the enigma code that policymakers are currently trying to crack with much difficulty.

Competition among cement giants

Mortgage access funded via Retirement Savings Accounts allows workers to use 25 percent of their contributions to secure homes, but that option appears limited. This means that a competitive cement market is the way out.

BUA Cement Plc. is providing this after its chairman, Mr Abdul Samad Rabiu met with President Tinubu in the middle of September.

Their interaction on Friday, 15 September pictured a substantial price reduction ranging between ₦3000 and ₦3500 since the raw materials required for production are locally sourced.

“Let me thank His Excellency Mr. President for graciously receiving me today. I came to intimate His Excellency on the affairs of our cement business. We have two new lines of 3 million tonnes each that we will be commissioned by the end of the year.

“So I came to intimate His Excellency and also to explain to him the efforts we’re making in trying to support again the efforts of the government in bringing down the price of cement.

“With this 6 million tonnes that are commissioning by the end of the year. And by the way, His Excellency has agreed to come and commission the plants, sometime in December or early January next year.

“So I explained to him that we want to support the efforts of the government in bringing down the cost of cement, by the time these lines are commissioned BUA Cement will be producing about 17 million tons per annum and with that, we intend to bring down the cost of cement from its current level of N5,000 or N5,500 per bag to maybe N3,000 to N3,500 per bag.

“And we can only do that because we’re producing cement locally. Eighty per cent of the raw materials that we are using to produce cement in Nigeria are mainly limestone and gypsum and of course, energy is part of it. Of course, we have gas in Nigeria.

“So we want to support the government; we want to support their efforts in ensuring that the prices of these commodities are brought down incidentally.”

Abdul Samad Rabiu, Chairman, BUA Cement Plc re-iterates commitment towards Cement Price Reduction

"We plan to commission 2 new cement lines [6 million tons] by the end of this year aimed towards reducing the price of cement from it's current level… We can only do that because… pic.twitter.com/KsThgfI0js

— BUA Cement (@BUACement) September 15, 2023

Perhaps, this honest approach is the catalyst that nudges other cement producers like Dangote Cement Plc. with a production capacity of 51.6 million tonnes per year across ten countries to abandon its current pricing regime.

If not, it stands the risk of losing buyers to BUA Cement which can also lay claim to authenticity in its product quality.