By Nudoiba Ojen
The Federal Government has threatened to open the borders to cement importation if local cement manufactures refuse to reduce the price of cement in the country.
The Minister of Housing and Urban Development, Arc Ahmed Dangiwa, says that although the Federal Government is aware of the macroeconomic challenges facing the country, some of the key components of producing building materials, especially cement, are locally sourced, and considered the recurring disproportionate increase in the price of the product as unacceptable and unreasonable.
Dangiwa, who spoke in Abuja at an emergency meeting held with cement and building materials manufacturers, said key input materials for cement production such as limestone, clay, silica sand, and gypsum sourced within our borders, should not be dollar-rated.
He said the price of gas that manufacturers being used as excuse should not be because gas is a raw material found within the country and the excuse of increase in mining equipment should not come up because the equipment bought by these manufacturers are used for decades and not just purchased daily.
The Minister, who said the border was closed to the importation of cement to help local manufacturers, said that but if the government decides to open it back for mass importation, prices of cement would crash and local manufacturers would be gravely affected.
Dangiwa who called on the manufacturers to be more patriotic said BUA Cement for instance has been willing and is still willing as at the last time he spoke with them to crash the price of their cement, lower than the N7000, N8000 agreed by the manufacturers, adding that he saw no reason why others should not do same.
He said, “The challenges you speak of, many countries are facing same challenges and some even worse than that but as patriotic citizens, we have to rally round whenever there is a crisis to change the situation.
“The gas price you spoke of, we know that we produce gas in the country the only thing you can say is that maybe it is not enough. Even if you say about 50 per cent of your production cost is spent on gas price, we still produce gas in Nigeria it’s just that some of the manufacturers take advantage of the situation. As for mining equipment that you mentioned, you buy an equipment and it takes years and you are still using it.
“The time you bought it maybe it was at a lower price but because now the dollar is high you are using it as an excuse. Honestly we have to sit down and look at this critically. The demand and supply should be good for you because the government stopped the importation of cement; they stopped the importation in order to empower you to produce more.
“Otherwise if the government opens the border for mass importation of cement, the price would crash, but you would have no business to do and at the same time the employment generation would go down. So these are the kinds of things you have to look at, the efforts of government in ensuring things go well.”
Earlier in his speech, Group Chief Commercial officer, Dangote Cement, Rabiu Umar, blamed the high cost of gas and mining equipment for the hike in cement price.
He said: “It is safe to say we are all Nigerians and we are all facing the current head wind that is happening. I will like to speak on the popular belief that most of the raw materials to produce cement are available locally. While we have limestone and in some cases we have gypsum and some cases coal, the reality is that it takes a lot of forex related items to produce cement.
“Most of the cement plants in Nigeria use gas to produce, the gas is index to a dollar and it is almost half of the total cost of production. So if 50 per cent of your cost of production is index to the dollar it means if the dollar changes then your total expenditure would change in that direction.
“For us to mine the limestone, one needs to import the mining equipment and the equipment is a substantial part of the cost of production, you have to invest in a lot of those equipment and invest in keeping them going. On the issue of the gas we also have the issue on the quantity of gas, we are not getting enough gas to produce enough to put into the market then we talk about the price and quality of the gas because they are all related.
“Regarding what is happening at the border towns because of the devaluation of naira it has made it a lot more attractive for people to come from neighbouring countries, with foreign exchange, buy cement and export it illegally across the border, of course what that has done is demand has increased meaning that available stock in the country has reduced and that has put a lot of pressure on the prices.”
