There have been reported cases of rising price of cement from N1,600 to
over N2,000. What is responsible for this?
I find it difficult to believe that cement is being sold at such a price when the product being rolled out from factories is being sold to distributors at N1,380 per bag. Outside this country, cement manufacturers don’t invest in haulage or transportation of the product, but here, we are investing massively in haulage to ensure that the product gets to the end users at the appropriate rate.
Dangote is investing heavily in transportation to lessen the impact on consumers. Currently, the company has 3,000 trucks that each lifts 600 bags, (about 40 tonnes) of cement. With this, the company dispatches cement to depots scattered across the country from where it reaches end users. So, as I said, it’s difficult to believe these stories of price hike.
We went to Port Harcourt, Abuja, Kano and Lagos and had sessions with our major distributors where we explained to them that if we fail, the government can reverse the policy. In return, we pledged to sustain the supply, give them ex-factory price and absorb the price fluctuation in diesel and gas price. We also encouraged them not to pass any cost to the end–users. To stabilise the business, we take the products to our depots through our haulage section and this goes for other manufacturers who take their products very close to their customers to beat the transportation logistics problems.
From your investigations, what have you discovered as possible reasons for the current hike and what are the measures being taken to address it?
I still believe that the perceived scarcity and price hike are out of the question in the cement market. There must be something wrong in the distribution chain with transportation and too many middlemen are also possible causes of scarcity and price hike. Some unscrupulous people and those whose interest may have been touched as a result of their selfish motives would prefer to sustain importation, but we want to discourage our nation from being made a dumping ground for foreign products. If the trend is not checked, it will mean that we are indirectly sustaining their factories while killing our local industries. In the last two years, we have not changed our prices and we have sustained our production.
Can the combined capacity of Dangote Cement Industries satisfy the local market?
I have been in the cement industry for 40 years. As a young engineer, I got to know that all geographical zones in the country have a measure of limestone deposit, which is a primary raw material for cement manufacturing.
Dangote Cement controls between 55 and 60 per cent of Nigeria’s cement market with eight million tons total annual output from its Obajana and Gboko manufacturing plants.
Obajana is the biggest cement plant in Africa. With the new expansion going on at the plant, those factories will double their capacity of five million tons to 10.5 million tons per annum. The new production line for that plant will be inaugurated by the second half of this year.
We expect six million tons from Ibeshe Plant when it is fully operational, and 2.5 million from Larfage WAPCO. All these coming up in one year is a huge output considering that the aggregate of all of them taken together will give you 14 million tons of cement this year. Place this side by side with the fact that total national demand for last year was 14 million tons and you will see that we are already there.
With these realities on ground and volume of expansion, no matter how high the local demand is, I can assure Nigerians that we are at a point where we will be calling ourselves a cement producing nation that is self-sufficient, while the surplus would be exported to the ECOWAS sub-region. In the last 18 months, we had excess capacity, almost one-and-half million tones that we couldn’t use. Before now people used to wait for at least six months before they can get delivery, but we are building excess reserve in products and stocks because we have enough capacity.
What was the picture like in the past?
Before now, what we had were foreign firms and they were not interested in making us self reliant in cement production. Until Dangote, a discerning investor acquired BCC in Gboko, Benue State and built the Obajana Plant and took advantage of the government backward integration in 2002 where they encouraged cement importers to go into manufacturing. Before now, we used to import about seven million tons per annum but now it has reduced to six million.
As a company, we believe that importation of cement will stop this year because there will no longer be a justification to dump cement here. With the lull in construction overseas, those countries are using us as a dumping ground. There is no reason for us to import cement. In post-1960, the government built some cement plants, in the mid-70s, the government relaxed the economy and with globalisation, importation started increasing. The administration of President Olusegun Obasanjo gave cement importers which were about 17 to start thinking of investing in building cement plants.
The government made it a condition that if you import, you must show signs of building plants, but most importers were not interested except for UNICEM, Lafarge WAPCO and Dangote cement which built plants.
Has the government given any specific incentives for local manufacturers of cement?
Government granted zero duty on equipment and also reduced the duty on gypsum.
List the challenges confronting cement manufacturers?
As l said initially, we resorted to bringing the cement we manufacture close to our customers through our haulage department. We took it upon ourselves as a sacrifice outside our clime. No cement manufacturer engages in the transportation of the product. We are doing everything possible to vindicate the government in the policy it made to encourage the local manufacturing of cement in our favour.
In some cases, we experience difficulty getting black oil for our plants, especially when there is a breakdown such as the one experienced in Kaduna refinery in the recent past. These are challenges. One can also not write off the huge amount we have invested in providing energy and other infrastructure in our plants and for our host communities.
Nigerians should encourage the government and local manufacturers to see that we are not made a dumping ground to sustain overseas economy while ours is comatose. We must jointly discourage those who want the country to continuously import cement while there are abundant human and material resources available in the country.
What is the position of Dangote Cement Industries on unbridled importation of cement?
We are a fully owned Nigerian company and our chairman insists on what is best for the country. He has always said that his interest is to serve the interest of Nigerians. We also want local manufacturers to be protected against importers who don’t have the interest of the nation at heart but what they can make from it. Opening our borders to importation is equivalent to killing our local industries while sustaining factories in those countries they are importing from.
We are providing employment to thousands of Nigerians in direct and indirect employment as we turn around otherwise distressed government cement production plants. We will soon be known as a cement exporting country. Currently, we have cement manufacturing companies in Senegal, Zambia, South Africa, Ghana and we are still counting.
Tell us your expectations from Nigerians.
We are a wholly indigenous company, the best Nigerians can do is to support us as we have all it takes to make this nation self sufficient in cement manufacturing because God blessed us with over 95 per cent of the raw materials with just about five per cent of additives imported. We should all agree to reject the toga of a cement importing nation where substandard cement finds space.
In terms of infrastructure we have invested heavily, the cement plant in Obajana is the most modern and biggest in Africa with a princely cost of $1.2 billion. In addition we spent $12 million to lay gas pipes to power our plants from Ajaokuta as we have three turbines each to power the plant. No foreigner can do this. Alhaji Aliko Dangote means well for the country and should be encouraged.
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