LATEST upward surge in the market price of cement, a major product in construction activities has continued to frustrate efforts of developers, builders and other stakeholders in the housing development sector of the country.
The development, which crept into the sector late last year is already taking its toll on activities of the industry, as manufacturers of some of the cement-based products are already warming up to increase their prices in response to the price hike.
Already, real estate developers and building experts are lamenting the development, saying that it does not allow them to plan their work. Besides, they expressed disappointment over deliberate attempt of some people to frustrate the distribution channel of the product across the country, so as to force the price up.
As at the weekend, a 50 kilogramme of the product which was sold for N1,550 last year now sells for between N1,800 to N1,900, depending on the product and the location of purchase. Similarly, a 9 X 9 inches block sells for between N130 and N140, while the price of interlocking blocks, a by-product of cement has increased slightly.
Several reasons have been adduced for the price hike. The Nigerian Compass gathered that one of the major manufacturers of the product embarked on routine maintenance of the machines and equipment, which has reduced the supply. It was also gathered that another manufacturer is experiencing hiccups in its distribution channels that has hampered the process, while others claimed that it was due to the increase in construction activities because of the dry season that has set in.
Although no official explanation has been given for the development, attempts to speak to one of the officials of Lafarge Wapco Cement Plc, at the weekend, was not successful as several telephone calls to his number could not get through.
But the Managing Director of Amorit International Limited, the developer of Amorit Estates, Abere, Osun State, Mr. Kayode Oyewole, lamented that the price hike has impacted negatively on their projects. He added that the development did not allow them to plan ahead as the price of cement kept changing from time to time.
He said that the price hike had impacted on the projects under construction as the price of cement had gone above what they had budgeted for at the commencement of work.
His words: “The price hike does not allow us to plan well. It does not allow for accurate planning, because of the instability of price of cement.”
Oyewole disagreed with the notion that the scarcity was due to the routine maintenance of machines and equipment of one of the manufacturers as the reason for the scarcity. He asked why a company embarked on maintenance in January and how long does it take to do that.
Past president of the Nigerian Institute of Building (NIOB), Mr. Kunle Awobodu, said the development had affected activities in the sector because of the increase in price of the product.
According to him, some projects that they have started when cement was being sold for N1,550 will now be faced with the current price hike.
He said: “Some of the projects that were started when cement was being sold at N1,550 may likely be reviewed or wait till there is a reduction in price of the commodity.”
Awobodu added that the price hike might not be far fetched from the increase in construction activities as a result of the dry season that has set in.
A member, Block Industry Association, Ibafo, Chief Musa Alakire, said that the scarcity and hike in price of the product had negatively affected most block industry activities, adding that although they were yet to increase the price of their products, if the scarcity persists, they would be forced to raise their prices as well.
Alakire urged the cement manufacturers to upgrade their machines and equipment to be able to meet the huge demand for the product across the country and ensure stable price.
Chairman of Lafarge-Wapco Cement Plc, Chief Olusegun Oshunkeye, said at the annual general meeting of the organisation that pricing of the product in the country would be favourable with the new drive of government to improve on major infrastructural facilities and unconducive business environment in the country.
While appraising the projection of the company for the future, as its 50 years existence coincides with Nigeria’s Golden jubilee, Osunkeye, said: “The company is committed to supporting the government in strengthening the nation’s economy. Over the years, it has acquired strategic and visible presence in the business environment with competitive advantage in terms of product quality and consistency of our dear product, Elephant Cement. These and more are what we celebrate at 50. We will continue to create employment by expanding our production plants and adding value to people’s lives.”
He said that the company was aiming at ensuring that it modernised its plants, through the employment of state-of –the art equipment for operations.
The board disclosed that a new Parker was recently commissioned at the Sagamu plant, which will boost cement dispatches and enhance turn-around of dispatch lorries, adding that one of the numerous measures being put in place in terms of increasing capacity through use of modern machinery and equipment to attain 2.2 metric tons, which will eventually take the average company’s capacity to 4.2 million metric tons at the completion of its ultra modern “Erin Lakatabu” plant in 2012.
Similarly, Dangote Cement Plc, recently says it will jerk up local production of cement in the country to about 20 million tonnes this year.
The company explained that the move was borne out of the need to improve production capacity of the product in Nigeria than consumption.
Managing Director of the company, Mr. Knut Ulvmoen, disclosed this in Lagos. He said that overall production of cement in the country was expected to peak at 8 million tonnes between now and 2012.
He added that the problem militating against slash in the price of cement “is energy”.
His words: “Even in a place that is producing locally today, the energy cost is our greatest problem. If this comes down, there should be room for cement price to come down. You can produce much less at less cost if your production is higher.
“This is because there is fixed cost, financial cost and lot of cost element you have to put into consideration. What is important is for us to continue to improve production capacity in Nigeria than consumption.”
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