NIGERIA: Unicem to Suffer N9bn Losses

The management of United Cement Company of Nigeria (UniCem) has disclosed that the firm will suffer losses totalling N9 billion in 2015 due to the economic downturn currently affecting Nigeria, culminating in the devaluation of the Naira.

Managing Director (MD) of UniCem, Olivier Lenoir, stated this at the weekend while fielding questions from journalists on the progress so far made on the ongoing N84 billion second production line project of the company known as Line II.

“The devaluation of the Naira impacts negatively on our business because most our transactions like procurement of spares and materials, payment of some of contractors (Macmahon and CBMI), energy cost and servicing of foreign creditors are basically dollar denominated. Cumulatively, we will have a revenue loss of N9bn in 2015 due the devaluation of the Naira", he said.

He said the construction of Line II project at Mfamosing, Akamkpa. Local Government Area, Cross River State wasvon course and would provide employment for hundreds of workers.

Lenoir said: “As you may have seen from the presentation earlier, this project will at peak employ a total manpower of 1915. At this moment the manpower working in the project is 1290. The operations will determine what the manpower need will be when we handover the project”.

On the level of work done so far since the ground breaking ceremony of the Line II project, Lenoir said: "The actual progress on extension of the Captive Power Plant (CPP) is 85 percent, and for the civil construction of the 2nd line it is 38 percent.”

He said the expansion of the power plant and construction of the Line II are progressing as scheduled.

The MD said the major challenges in this project are: Non-technical, which include high level of malaria infection; heavy rain falls; customs clearance.

Lenoir said despite these hitches, UniCem is optimistic that the project would be completed on schedule.

He said the projection for the completion of work on the Line II, which include the Clinker NOCP (normal operation condition period) is September ,2016, which the completion of the Cement NOCP(Normal operation condition period) is projected December ,2016.

Furthermore he said, the completion of the “extension of the captive power plant- end of performance test” is set for September, 2015 and “provisional acceptance of power plant- October, 2015.”

Explaining the essence of the second production line, Lenoir said: “Ordinarily, yes it should translate to more supply which should bring down the retail selling price following the basic economic principle of Demand and Supply. However, other cost-push variables are not constant nor reducing e.g. energy cost, distribution cost including taxes and other environmental factors like road infrastructure. What is key in driving down retail selling price is reduction in cost of production and distribution which the government can do by creating of enabling environment like provision of basic infrastructure. We hope the incoming government will look into this by addressing the current road infrastructure concerns.”

He said though the standardisation policy for cement production was yet to be implemented; UniCem produces and sell cement products that conform to applicable standards in Nigeria.

“All our products are in compliance with regulatory standards. We went to offer production and services that satisfy customers’ needs,” he said.

According to him, "the review in scope of the project, challenging alignment of the road due to vast swamp and limestone rocks deposit on the right of way and Inclement weather due to excessive rainfall experienced in Cross River State have been the major limitations to early completion of this project."

He stated that there are two bridges on the entire stretch of the road; one of 30metres length, across Etamkpini River at km 13.5 and another of 105metre length, across great Qua River at the border of Ebereka and Etamkpini at Km. 9.6 .

Lenoir said: " in all we have over 80 numbers of box and pipe culverts across the 20 kilometre Evacuation road. These are conceived to give the road the desired stability in view of the terrain".