The current increase in the price of cement, which took the consumers unawares only two months after the Federal Government gave local manufacturers a standing order to increase production capacity to crash down the price, is biting harder. A bag of cement now sells for N2,800, against the initial price of N1,500.
While most people attributed the sudden price hike to lack of infrastructure like constant supply of electricity to enable local manufacturers produce at a cheaper rate, others said the persistence price increase is caused by the market forces of demand and supply. This implies that demand is greater than supply of the product in the market, thereby forcing the price to go up.
Some block makers who spoke with Sunday Business during a market survey, said the decrease in the supply chain occurred recently because one of the major manufacturers stopped production due to challenges in the business.
The hike in cement price assumed an alarming rate last week with a bag being sold for N2,800 in some areas of Ojodu, Berger, Isheri, and Sabo in Lagos while some retailers in Alagbole, Akute, Olambe, Oshere and Matogun areas of Ifo Local Government Area of Ogun State, sold a bag for N3,000.
The manager of Adufat Block industry at Kampala area of Olambe, Mr. Ade Shittu, said, “the demand for cement in the market is very high because of the level of consumption. Government should grant more people licences to import cement to meet the demand of consumers”.
Our visit to some block makers revealed that they are the worst hit, because they engage in daily business of moulding blocks, which they supply to building engineers at construction sites.
While some of them have few bags of cement left in their shops, others are out of stock, thus being forced to stop operations. For instance, the price of a six-inch block, previously sold for between N120 and N125, now goes for N150, while a nine-inch block, which is bigger in size, and of better quality, sells for between N170 and N175, against the initial price of N135.
There is the multiplier-effect. For instance, a tipper load of sharp sand used in moulding and setting blocks has also increased from N10,000 to N12,000, while the price of plaster sand remains N13,000 per tipper, depending on the quality.
Our visit to some depots of Lafarge/WAPCO Cement Plc in Lagos showed open transactions with the old price of N1,600 per bag of cement displayed on the price index board.
When contacted, Head of Communications, WAPCO Cement, Temitope Oguntokun, said, “our prices are still the same. There is no increase in the price of cement from our company at present.
We are putting measures in place to increase our production capacity from 2.5 million tonnes (MT) to 4.5 million tonnes (MT) annually in order to meet the increasing consumption demand in the market.
Aside from that, WAPCO has done a lot of work in the expansion project of N75 billion (€354 million), which involves construction of a new cement plant at Ewekoro, construction of a new power plant with electricity generation capacity of 90 mega watts (Mw) and the installed capacity of 76 MW.
Other projects include construction of a 4.7kilo metre long double conveyor belt to transport limestone and shale between the quarry and the new cement plant, improvements of the existing cement plant, additional power capacity, clinker silo of 60kt capacity and coal grinding mill.
“WAPCO is still complying with the recent directive from government on the need for manufacturers to cut down the price of cement. We share the concern of government on the price of cement.
Prior to the announcement by government, we took proactive initiatives to increase the volume of our products to various outlets.
The initiative was to ensure that a higher number of end-users could purchase cement directly from us at our official price. That was following the increase of our sales outlets from seven to over 19.
We equally placed our official price at all our depots nationwide. We would continue with our plans of opening more depots to push more volumes to these depots”.
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