Why Cement is expensive In Nigeria – Dangote

Dangote Group Executive Director in charge of Strategy, Portfolio Development, and Capital Projects, Mr. Devakumar Edwin, has stated the reason for the increase in cement price in Nigeria.

The management of Dangote Cement Plc. had earlier stated that the price of a bag of cement from its factories and plants in Obajana and Gboko is N2,450, and N2,510 at Ibese.

The Group director attributed the high cost of cement in Nigeria to the global rise in demand for cement as a result of the COVID-19 crisis.

“Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity.

“To ensure that we meet local demands, we had to suspend exports from our recently inaugurated export terminals, thereby foregoing dollar earnings,” he said.

He said that the company had also reactivated its 4.5million ton capacity Gboko Plant which was closed down four years ago and the company is running it at a higher cost.

“This is all in a bid to guarantee that we meet demands and keep the price of cement within control in the country.

“Over the past 15 months, our production costs have gone up significantly.

“About 50 percent of our costs are linked to the USD, so the costs of critical components such as gas, gypsum, bags, and spare parts; have increased significantly due to the devaluation of the Naira and VAT increase.

“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly,” he added.

He said that the company had only adjusted its transport rates to account for higher costs of diesel, spare parts, tires, and trucks’ replacement.

According to him, the clarifications become necessary in view of the recent insinuations that the company sells cement in Nigeria at higher prices relative to how much it sells it in other countries, particularly in Ghana and in Zambia.

“This allegation is false, misleading, and unfounded.

“While a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes,” Edwin explained.

He said that though, the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the open market.