Monday, May 30, 2011

AFRICA: NIGERIA: Producers target June to crash cement price



Following the 30-day ultimatum given by President Goodluck Jonathan to cement manufacturers in the country to bring down the cost of the product, Cement Manufacturers Association of Nigeria (CMAN) on Thursday reassured that the price of cement would go down before the middle of June.

Joseph Makoju, chairman of CMAN, gave the assurance at a press briefing in Lagos. He said the association was fine turning major processes that would lead to the price reduction.

Makoju said the association would ensure that it met with the desire of President Goodluck Jonathan on the reduction in the price of cement.
Speaking at a meeting with cement manufacturers at the Presidential Villa, Abuja, the president had said the decision to bring down the price of the product “is to make it more accessible to Nigerians.”

The CMAN chairman listed measures that would bring about the price reduction to include - increase in production and flooding of the market with the product as soon as possible.

“We, on our part have taken measures to import more cement into the country. One of CMAN member firm, Dangote Group, has imported 5000 trucks to reduce the haulage challenges being faced by dealers.

“We have to discuss with the dealers because they have a major role to play in cement pricing. The major challenge is the role of the middlemen who increase the price excessively from the factory price of between N1, 550 and N1, 700 to the current market price.

“As at today, the factory price is still between N1, 500 and N1, 550 per bag of cement.

This is because an extensive analysis of the operational and market performances of the product did not show any significant increase in demand. The findings were carried out in four plants which include: Dangote Cement Plc, Ashaka Cement plant, Lafarge Wapco Cement Plc and one other,” he said.

BusinessDay meanwhile gathered that CMAN was already meeting with distributors on ways to reduce the cost of cement in the market and has already began to increase cement depots nationwide and also increase the number of trucks to supply the depots.

Although some manufacturers have complained that the closure of the Kaduna refinery between February and April affected companies that use LPFO to produce. They readily pointed at Benue Cement factory which shut down for two weeks, leading to scarcity of cement.

The manufacturers however said the price of cement is not entirely for them to decide stressing that they could only ensure there was enough cement in the market because, “when there is scarcity of any product, there is bound to be increase in price. But now that there is enough cement in the market, the price will gradually come down,” said Makoju.

Specifically pointing at transporters, Makoju said they often capitalise on the hike in the price of diesel to increase the cost of haulage astronomically. “Once there is an increase in the price of diesel, transporters would take that opportunity to increase their charges,” he said.

He disclosed that another Dangote Cement plant at Ibese in Ogun State with 6 million metric tons per annum capacity is in the final stages of completion and commissioning will commence in August, this year.

The manufacturers have estimated an estimated supply of 17 million metric tons that will be produced this year. A number of new cement plants with combined capacity of 14 million metric tons currently that are under construction are all expected to come on stream at different periods of this year and we expect some considerable additional output from the factories.

The CMAN boss further noted that the backward integration policy introduced by the Federal Government in 2002 was working because it has attracted huge investments to the sector.

According to him, Nigeria was barely producing two million tons of cement in 2002 before the introduction of the policy, but it now produces about 17.5 million tons annually.

Makoju noted that the sector could be used to diversify the nation’s economic base if government sustained its policy in the sector.

“The country has adequate raw materials to produce cement to meet local consumption and for export. In fact, most of the manufacturers have started to construct jetties preparatory to exporting the product,” he said.

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