Once again, prospective property developers in the country have been hit with yet another round of cement price hike. This is coming just two months after President Goodluck Jonathan directed manufacturers of the product to crash the price of the commodity, which they actually did briefly.
Just like a baton changing game, Kerosene scarcity/ price hike just gave way- though not totally - and now cement prices had picked from where kerosene stopped.
Different reasons have been given for the latest price hike but they are technically not quite different from the previous ones stakeholders in the industry tabled when they met President Jonathan.
The Cement Manufacturers Association of Nigeria has said the current high cost of cement was due to an increase in the cost of Low Pour Fuel Oil (LPFO).
Mr. James Salako, Secretary to the association, said the price of the oil has increased from N40 to N68 per litre. He said the distributors of cement took the decision increase the price, with the knowledge that manufacturers would not cope with the price differential for a long period.
Salako said one of the major manufacturers has stopped production to undertake a turn-around maintenance of its plant, adding that this reduced supply. "These are the reasons for the hike," he said According to him, distributors are now hoarding the product in anticipation of a formal increase in price by the manufacturers.
Some of reasons given by the manufacturers do not sound alarming though but the reality in the cement market and lack of access to the commodity is quiet alarming. For those who face the reality in the market place of purchase, no explanation has yet cushioned the effect of the price nor has changed the sad reality they are hard hit by.
Bitrus Toma, Managing Director of Gyel Block Industry in Masaka, in Karu local government area of Nasarawa State, said some weeks ago, he bought the commodity at 1,600 naira but it rose to 2,000 naira and even beyond in some places but now it is 1,800. He told Weekly Trust that it has, however, not yet affected block prices. "We have not yet increased our prices but if the status quo is maintained, we would have no option than to hike the price of building blocks by Monday."
He said all block producers had agreed to monitor the situation but if it does not improve, then price hike of blocks is imminent, latest by Monday.
Meanwhile, a land developer in Katsina State told Weekly Trust that he used to buy the commodity at 1,650 naira but has risen to 1,850 naira. According to him, cement sellers claimed that there was increase in the transportation fare and thus they have to also increase their price to be able to meet up.
Mr. Alamba Jidauna of Lamba Block Industry in Kubwa, FCT said he buys the commodity for 1,850 naira to 1,900. Unlike the other block producers, he has hiked his price a little bit. "I don't want to deceive my customers by reducing the quality of the product just to maintain the old price. I have told them that there would be a little price hike so as to maintain the quality pending when the situation changes. Six-inch block that was sold for N 120 is now N 140, while nine-inch block that was sold for N 140 is now N 155 here. But I assure my customers that the moment the situation changes for good, the price would surely crash too. They know the quality of my blocks, so I don't want to compromise that. Hence, I told them the truth.
While most people attributed the sudden price hike to lack 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 higher than supply of the product in the market, thereby forcing the price to go up.
According Uche Nweze who is trying to complete his two-bedroom apartment at Byazhi, outskirt of Kubwa, "government should think of the common man who is struggling to get shelter for his family. With that outrageous price of cement, how can a common man cope?"
For Eze Amara who sells cement at Jabi "I have added 300 naira to a bag of cement. It is now 1, 900 naira. I don't know if the manufacturers have increased their prices, mine was due to the transportation increment. Is only the main dealer who I collect goods from that would ascertain whether the manufacturers have increased. All I know is that the price has gone up a bit."
Speaking on the implication of the high cost of cement, Architect Mustapha Ado of Dream Land Consult said the concern of people in his profession is that the high cost of cement could force people who are in construction work to go for poor quality products to cut cost. Such situations had in the past given rise to cases of collapsed buildings in parts of the country.
Reeling his experience of the cement market, "in my own opinion, I think the government should also look at the supply side that has to do with importation. The high demand and low supply is also a factor that has to be looked into. If our local manufacturers do not have the capacity to meet the high demand, why not import since it is cheaper abroad. Common sense should make Nigeria to start importation since it is cheaper to do so. The truth is that even some of our so-called manufacturers import a huge quantity of cement and bag them here for sales. So allow more people to import."
Ado said there are rumors making the rounds that one of the factors is the expiration of the licenses issued to manufacturers to import cement to the country. "I also hear of the transportation burden and the cement factory oil. But these are all regular issues they take advantage of to hike prices and hoard commodities."
He suggested that there should be a price control agency that would monitor both the manufacturers, wholesalers; retailers and even local block sellers so that they don't take advantage of such situations.
"In the United States, 80 pounds bag of Portland Cement is $4 (six hundred naira) while in England, it is just a couple of pounds higher. Why does it cost three times as much in Nigeria?," he queried.
The Federal Government has given 2013 as the target for the achievement of the self-sufficiency in cement production. However, the current national demand for cement is estimated at about 13.5 million tonnes whereas the national production level is 11.5 tonnes since 2009.
It could be recalled that in 2008, the Nigerian cement industry had an estimated market size of N361 billion (US$2.4 billion), or in aggregate consumption terms, 13.4 million tonnes, of which 46 per cent (6.2 million tonnes) was produced in Nigeria. Driven by the acute infrastructure deficit and significant demand for housing, the domestic production volume of the product has grown at 25 per cent (CAGR) over the last four years but has still not been able to meet the increasing demand.
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