Chairman of BUA Cement, Abdul Samad Rabiu, has said dealers and continuous devaluation of the naira are responsible for the high cost of cement in the country.
According to him, efforts to crash the price of cement from N4,500 to N3,500 per bag last year were frustrated by the thwo factors.
He stated this in an address at the firm’s 8th annual general meeting held in Abuja.
Rabiu said his company had sold over a million tons of cement to dealers at a price of N3,500 per bag, intending for these savings to be transferred to the end-users, but they end up selling for prices ranging between N7,000 and N8,000 to consumers — making huge profits from the high margin because the company had no control over prices in the open market.
The BUA chairman noted that the naira devaluation and the petrol subsidy removal also made the company’s policy to crash cement price unsustainable.
“So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them,” Rabiu said.
Rabiu said the company still subsidised the product’s price despite the challenge caused by the naira devaluation.
He said the company continued to work towards making sure that prices did not escalate at levels of the percentage increase of the naira devaluation.
“If you see the exchange rate then, and the exchange rate today, you will see that cement is cheaper today than what it was last year, the reason being that if the dollar was up the costs go up by the same margin and the price of cement should be, maybe, N10,000 per bag,” he added.
“The price of cement, if you take the N4,000 that it was at the beginning of last year, and today’s N6,000, it’s only 50% increase.
“So, we directly pushed to ensure that the price of cement is not getting higher than what it is today.
“But then again, you have areas where everything is dollar-dominated. Energy is the biggest cost. And our energy today is denominated in dollars.”
Rabiu also said the company buys gas to power its plants “and gas is priced in dollars.”
