Why we couldn’t sustain reduced cement prices – BUA Group

By Nudoiba Ojen

The Group Executive Director of BUA Group, Alhaji Kabiru Rabiu, has shed light on how the company effected reduction in the price of 50kg bag of cement last year to about N3,500.

Rabiu, who said that the price reduction ran for over five months as bonanza, said middle men took advantage of the gesture to rob the end-users of the expected impact in the industry.

He said: “It actually happened. Our chairman made the commitment and we carried out a reduction in price and ran it for five months; we reduced the price of our cement across our plant to N3,500 but that was actually for ex-factory.

“But as you know industries such as cement in Nigeria when you do this kind of commitment we were expecting other players to come along.”

“Because if you look at the industry where we operate our market share is 30 -32 per cent and for us to make this gestures and other players are not doing it, it becomes very difficult for it to be fully implemented.

“We ran the programme for almost five months and because players did not follow suit, the distributors and the middleman began to take advantage of our gesture.”

Rabiu who said the price reduction was carried out to support the economy, said other manufacturers did not play along, a development that forced the company to apply the brakes when production companies hit the roofs.

He said: “So what happened was that even though we are selling cement at N3,500 in order to support the economy, there were no really direct benefits at least to the end users.

“This is because other players were selling previously higher prices and with that it became increasingly difficult for us to continue and whilst we were doing that, the cost began to increase and were forced to change our position a little bit.”

He said another factor that forced the company to change the price of cement include challenges experienced in one of the production plants which experienced reduced production.

“And whilst we were doing that we believed that one of the plants had some issues with reduced production. We do not know whether it was by choice or it was a sort of maintenance by them so that put an enormous pressure on our cement supplies to meet the increased demand and therefore even widen the gap between what we were selling in the factory and what the market was,” Rabiu said.

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