Cement dealers frustrated efforts to sell product at N3, 500 per bag – BUA

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*Rabiu

Ime Akpan

The chairman of BUA Cement, Mr AbdulSamad Rabiu, has blamed cement dealers for checkmating the company’s plan to sell the product at N3, 500 per 50 kilogramme bag last year.

Rabiu disclosed this yesterday at the 8th annual general meeting of the firm held in Abuja.

He said the company sold a bag of cement to dealers at N3, 500 per bag, with the hope that they would pass the benefits to end-users.

Instead, he said the dealers sold the product to consumers between N7000 and N8, 000 per bag to the consumers.

He said the company was helpless in stopping the dealers from making huge profits from the high margin because the company had no control over prices in the open market.

Consequently, Rabiu said the company had to abandon the policy as its intervention was not to subsidise dealers.

Besides, he said the 2023 devaluation of the naira as well as the petrol subsidy removal also combined to make the policy 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.

“Some were selling at N7, 000 and 8 000 per bag. They made a lot of money with the very high margin. I think we had sold more than a million tons at N3, 500 before we realised what the dealers were doing.

“And then, because of the issues that Nigeria faced at the time about devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy.

“We wanted that price to stay at that level but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.

“I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1, 800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy,” he said.

He said, however, that the company had 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 actually cheaper today than what it was last year, the reason being that if the dollar was up the costs go up by same margin and the price of cement should actually be, maybe, N10, 000 per bag.

“The price of cement, if you take the N4, 000 that it was in the beginning of last year, at N4,000 and today’s NN6,000, it’s only 50 per cent 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. We buy gas to power our plants mainly. And gas is priced in dollars,” he added.