The news got even better as BUA Group of Companies Tuesday signed a $500 million contract for the production of 2.5 metric tonnes of cement per annum in a move that should see Nigeria achieve self-sufficiency in the manufacturing.
Overall, the average price reduction since the president issued the order to crash price on May 16, 2011 is about 16 per cent, which experts and analysts consider too low considering the fact that cement sells in countries like China, Turkey and India at an average price of N700 per 50kg bag of cement.
In Lagos, the survey, which covered Ikeja and its environs, showed that from about N2,500 per 50 bag of cement the price has moved down to between N2,200 and N1,900, depending on brand and location of retailer.
In Ogun State, the survey covered the Akute, Lambe and Matogun areas where massive residential building construction is ongoing and found that the price of cement had come down from about N2,600 per 50kg bag, which was the price before the president issued the directive, to between N2,200 and N2, 300 per bag.
As for Benin City, Edo State the price of cement has gone down as well, standing at about N2,200 per bag, down from N2,600 per bag before the directive.
The situation in Port Harcourt, Rivers State, is a mirror image of Benin. Before the directive a 50 kg bag cost about N2,600 in Port Harcourt and has now come down to N2,200 per bag.
In Asaba, Delta State the price drop is more remarkable than others apart from Lagos. The Price of a 50 kg bag of cement after the president’s order is now between 1,900 and 2,100 depending on the brand and the location of the retailer. In Sapele also in Delta state, a 50 kg bag of cement goes for about N2000.
Up North, the price of cement has also declined marginally. Before the presidential directive, the product was sold at an average price of 2,550 per 50kg bag in Bauchi. But after the president’s instruction the price has now dropped to 2,200 per bag representing a 13.7 per cent reduction.
President of Cement Manufacturers Association of Nigeria (CMAN) Mr. Joseph Makoju told THISDAY that manufacturers in the country are committed to the directive of the president and are therefore exploring all measures to ensure that the price comes down.
BUA’s contract, which it signed with FLSmidth, one of the leading international building firms for cement companies, is for the expansion and modernisation of the cement line at Edo Cement Plant, Okpella, which BUA group acquired in 2009.
It will add about 45 million bags of cement to the market and create 4,000 direct jobs for skilled workers and 20,000 indirect job openings when production commences in August 2013.
At the signing ceremony which took place at Transcorp Hilton, chairman of BUA Group, Alhaji Abdulsamad Rabiu, explained that since acquiring the plant in 2009, his company had discussed with about six international companies but decided on FL Smidth as the one that is most capable of handling the construction of the state-of-the-art plant.
He thanked the Federal Government for its support and encouragement, which enabled it achieve this feat.
“We hope that by the special grace of God, on completion of this project, this administration’s vision of self-sufficiency in cement and massive job creation will be achieved,” Rabiu said.
Vice President of FL Smidth, Mr Per Mejnert Kristensen, said his company would build a state-of-the-art plant that could produce high quality cement at low cost.
He said having built several cement companies in Nigeria, his firm would deploy its wealth of experience in the construction of the new cement line, adding that it was proud to be part of the future development of Nigeria’s continued growth.
According to him, he was convinced that the growth the country witnessed in the last few years would continue.
Makoju, on his part, said it was “a happy day for us in the Cement Manufacturers Association of Nigeria” because BUA’s technical consultants, FS Smidth, were so well-known that “once you hear that name in connection with a cement plant, you can be sure you are getting the best.”
He commended Rabiu’s decision to make the investment because few people like to invest in long-term projects.
Makoju also thanked the government for its backward integration policy that was encouraging indigenous investors in the sector.
“From importing, Nigeria is now poised for self-sufficiency and exportation of cement,” he stated. “I also thank BUA for the decision that will move us to the group of cement producing nations.”
The Managing Director of Edo Cement, Mr Abiodun Abe, assured that the required skilled manpower would be trained locally and “we shall run this plant to the best of my ability”.
Noting that it would not be a flash in the pan as was common with many industries in Nigeria, Abe said he would run the plant professionally and continuously.
“BUA will make huge contribution to government’s effort to sell cheap cement,” he affirmed.
Mr Jubril Aku of Ecobank, one of the financial partners, said they had been partners with BUA for long, including during the acquisition of Cement Company of Northern Nigeria (CCNN) and Edo Cement.
He said he was sure the company had chosen the right partners and that they would ensure the growth of the sector.
BUA was one of the six companies licensed by the Federal Government three years ago to bring into the country bulk cement, which is then re-bagged for sale. The move was to stem the rising cost of cement which had peaked at N2,500 per 50km, bag.
To achieve that objective, the company immediately purchased a 40 million dollar floating terminal called BUA Cement 1. The company is also currently engaged in various construction and expansion initiatives aimed at consolidating its hold in the cement industry.
The acquisitions are coming exactly one year after BUA’s entry into the cement business.
BUA is currently into the production of sugar and flour with factories located in Apapa and Kano. The BUA Sugar Refinery, which is only the second of its kind in West Africa has an installed capacity of 720,000 metric tonnes per annum and is presently producing at 75 per cent of installed capacity.
The two flour mills are both located in Apapa and Kano and have a combined capacity of 1,000 metric tonnes per annum.
