NIGERIA: Cement’s 300% more expensive

Stakeholders in the cement industry have called on the Federal Government to take steps to crash cement price said to be about 300 per cent above what obtains in countries like Egypt, China, Taiwan, India, Japan, Norway, Turkey, Indonesia, Pakistan, Iran and Iraq.

In a letter addressed to the Presidency and made available to newsmen, the President, Cement Producers Association of Nigeria (CPAN), who is also a member of Nigeria Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. David Iweta, said the price of cement in countries that have attained sufficiency in production, like Nigeria, was about N500.00 per 50kg bag.

Iweta said the international best practice for cement manufacturing is for investors to earn IRR (internal rate of return) in the region of 25 per cent but experience has shown that Nigerian cement investors are earning over 150 per cent IRR in cement investment such that investors recoup their investment within two years of operation.

According to him, local cement manufacturers have constantly declared annual profit “By this token, all such local manufacturers claiming large investment have since recovered their investments. It is regrettable that the price of the product is hovering between N1,800 and N2,000 per bag.

“We strongly recommend that Mr. President should revisit this strategy by considering granting more licenses and abolish the levy of 20 per cent, with 15 per cent duty but retain the five per cent duty and five per cent VAT on imported cement.

“This will force the local cement manufacturers that are hiding under the high cost of imported cement, which attract 45 per cent extra cost comprising duty, levy, NPA, NIMASA, in addition to cost of freight in the region of $50.00 per metric tonne. The total extra cost paid on imported cement is in the region of N900.00 per bag, stressing that imported cement will sell for N1,000 per 50kg bag if the Federal Government retains duty and VAT at five per cent each on imported cement.

“The local manufacturers are still in a better position to make N500.00 profit per bag owing to the fact that they make use of free local limestone and could sell cement for N500.00 per 50kg bag,” Iweta said.

He said the housing deficit in Nigeria is estimated at 17 million, adding that housing like agriculture is a major provider of labour in many economies. He said if the Federal Government is committed to filling the gap in the housing sector, it is capable of providing employment for 34 million Nigerians.

“The roadblock that will make this project and target to fail is the ever rising price of cement in Nigeria, which claims to have attained self-sufficiency in cement production even though it is classified as a country with the highest price of cement in the world,” he said.