The cheery news that came yesterday on the downward review of cement price by some manufacturers in the country may not translate into relief for consumers as major distributors of the commodity in Lagos have expressed reservation about the decision and vowed not to effect the change in price.
Citing high inventory of the commodity, which was acquired at a high retail price, the stakeholders said it would be difficult for consumers to access the product at the new rate. The Guardian learnt that already, there are talks between the parties on how to ensure that the distribution chain is not weakened as a result of the commodity’s price review.
With domestic cement production inching towards 60 million metric tonnes per annum, due to recent expansion projects embarked upon by many of the manufacturers, it is expected that the commodity should be available at a cheaper price.
For instance, Dangote Cement in September this year achieved an installed capacity of 29.2 million metric tonnes, ahead of Lafarge Africa, which currently has 12 million tonnes with expansion plans to hit 17.5 million tonnes by 2017.
Similarly, the United Cement Company of Nigeria (UniCem) is investing N84 billion in an additional 2.5MT cement line project to double its 2.5MT existing capacity to 5MT per annum by 2016, and consolidate its position in the industry. Also, Ashaka Cement is investing N100 billion to increase capacity to four million tonnes per year.
With the BUA Cement factory in Okpella in northern part of Edo State ready for commissioning in 2015, the overall local manufacturing output of cement in Nigeria is set to take a leap from the current figure of about 30 million metric tonnes per annum to about 60 million tonnes yearly.
Furthermore, the price review is believed to have been provoked by recent cement standardisation reforms embarked upon by the Standards Organisation of Nigeria (SON), which, among others, include labelling criteria and specifying the shelf life of the commodity.
The shelf-life policy and batch numbers indication on cement bags are expected to guide consumers in buying cement that may have been on the shelf beyond the prescribed six months while also ensuring that distributors do not hoard the product. The new cement standard NIS 444-1:2014, has prescribed new guidelines for advertisements, storage and labeling of cement products in Nigeria as well as a proper regulatory framework for all stakeholders.
Investigations conducted by The Guardian revealed that consumers who demand for the product at the new price might have sparked off the move by the distributors to resist the manufacturers’ efforts.
The manufacturers, on the other hand, have resolved not to yield to the efforts of the distributors. According to them, the new price took effect from November 1 and it would not be changed as it was discovered that many of the distributors have been hoarding the commodity in other to maximize profit.
A source at Dangote Cement Plc yesterday noted that the company might only consider giving rebates to distributors who have a good track record and have recently bought the product at the existing price before the recent review.
The source said: “We have since discovered that hoarding of the products by some distributors has been responsible for the high cost of cement in the country. Many of the distributors are greedy and only trying to maximize their profits. We would not allow this to happen. The company may offer a rebate to distributors who have recently bought the product and still have a large inventory to offload”.
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