Distributors’ greed, logistics, energy, high tax, multiple levies, supply gap and panic buying have been identified as key factors responsible for the persistent high price of cement across the country and the outlook is predicted to remain severe in the long term, BusinessDay can reveal. The price of this vital commodity now ranges from N1,600 to N2,100, depending on which part of the country you are buying from or how close you are to production points. Dealers and consumers agree that the effect of higher cement price is impacting severely on the quality of blocks and prices as well.
Shortage of the product became noticeable about two weeks ago when most sales outlets ran out of stock. “The problem has to do with irregular supply of the product from major distributors,” says Udeme Okon, a local cement dealer. “We have not had supplies for quite some time now and we don’t know what is happening.”
“The last supply I received from the distributors was at the rate of N1,800 per bag, up from the former price of N1,350. When I went back for more, I was told that the product was no longer available. The scarcity is artificial,” says Michael Ezeanyanwu, another dealer who spoke to BusinessDay.
He added that some marketers hoard the commodity whenever there is a delay in supply from the factory and by so doing, create scarcity, leading to price increase of the product.
In Port Harcourt, Yenagoa, Uyo, Benin and Asaba, cement price remains largely the same, hovering between N1, 500 and N1, 600. However, the price has risen in Calabar, the Cross River State capital following an acute shortage of the product.
At the building materials section of Watt Market in the Calabar metropolis, a bag of UNICEM cement now sells for N1, 900 as against its former price of N1, 400.
At the building materials section of Watt Market in the Calabar metropolis, a bag of UNICEM cement now sells for N1, 900 as against its former price of N1, 400.
According to our investigation, in Umuele, a village in Imo State, cement ex-factory, ex-dealer/depot retail price is N1, 600. In Ibadan in the South West, its price ranges between N1,700 and N2,000.
High cost of fuel, particularly diesel, was also identified as a big factor in the commodity’s price. The further away one is from the point of production, the more one has to pay for a bag of cement because the cost of transportation increases with distance.
In the North Central city of Jos, for instance, a distributor says he gets a 600-bag truckload of cement from the company in Benue for N755,000 which works out at N1,258.33 per bag. A bag is sold to retailers at the rate of N1,750 while the retail price is N1,800 per bag.
Joseph Makoju, chairman, Cement Manufacturers Association of Nigeria (CMAN), says middlemen along the supply chain are too many contributing to the high cost of the product.
Joseph Makoju, chairman, Cement Manufacturers Association of Nigeria (CMAN), says middlemen along the supply chain are too many contributing to the high cost of the product.
One chief executive of a cement manufacturing firm suggested taxes and levies are another big issue. He told BusinessDay that the Federal Government has to urgently address the problems of cement importers, especially the 35 per cent tax and levy. He wants the tax to revert to the old rate of 5 per cent until the nation attains self sufficiency.
According to him, it is mind-boggling that eight years after government introduced the backward integration policy in the cement industry, during which period over $10 billion has been invested on capacity development which has brought about 500 pecent increase in output, cement still remains expensive.
Existing manufacturers have been authorised by government to import some three million tons of cement to fill the supply gap in the market, says Knut Ulvmoen, Dangote’s group managing director (cement). According to him, logistics, energy, supply gap and panic buying are responsible for the soaring price of cement across the country.
“We have not increased our price. We have no plan to increase price. But distribution cost is partly responsible for the problem; high price of diesel has hiked distribution cost. We are not in control of distribution and all that goes with it. The distributors handle this”, Ulvmoen said.
businessdayonline.com/NG/index.php/news/76-hot-topic/19348-distributors-fuel-cost-supply-driving-higher-cement-price
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