Home Finance Dangote, others move against bulk cement importation, Committee to review policy underway

Dangote, others move against bulk cement importation, Committee to review policy underway

by Business News Report

By Omoh Gabriel, Business Editor
Cement manufacturers in the country have petitioned the President alleging that the ministry of commerce has opened the gate for importation of cement into the country thus jeopardising their investment. The petition which was spearheaded by Alhaji Aliko Dangote is currently receiving the attention of the President who has directed the Minister of Finance, Mansur Murtar to constitute a committee to look into the matter. As a prelude to constituting the Committee, the Minister of Finance is on a fact finding tour of cement plant in the country. The minister has already visited the Ewekoro and was billed to visit the Obajana plant last Saturday.
Dangote and his co cement manufacturers had in the petition to the President alleged that the Ministry of Commerce and Industry has allowed the importation of cement into the country at the expense of local manufacturers. The petition it was learnt argued that local manufacturers had invested a lot in machinery and equipment to set up factories to produce cement locally. They also said that government has not given enough incentive to local producers but only policies that tend to work against manufacturing in the country.
Prices of cement have been on the rise and government in a bid to check the ever rising prices of cement gave import license to some Nigerians to import the commodity with a view of bringing down the price of cement to an affordable leve.
As a result President Umaru Yar’Adua had last year lifted the ban on importation of bulk cement and granted import licences to six new firms along with the existing cement manufacturers to flood the market with the product and force prices down. Former Minister of Commerce and Industry, Chief Charles Ugwuh, had said that the decision was to make up for the 11.5 million tonnes per year shortfall in the cement market.

Local operators data show are only able to supply about 6.5 million tonnes into the Nigerian market while total national demand was estimated at 18 million tonnes per year. The six new companies that got the import licences to complement existing ones are: Minaj Holdings Limited, Enugu; Madewell Products, Sapele; BUA International Limited, Kano; NICA Limited, Maiduguri; Reagan Renaissance Limited, Calabar and MAAN Labadi, Lagos.
They joined the seven existing players РLafarge Cement WAPCO Nigeria, Ashaka Cement, Benue Cement Company, Obajana Cement, UNICEM Calabar, Cement Company of Northern Nigeria, Sokoto and DURECHEM, Ogun State – that are already into the manufacturing and importation of cement. But up till now the prices of cement is still about N 2,000 per bag.
Following the intractable problem created by rising cement prices in the country, Minister of Commerce and Industries, Achike Udenwa recently appealed to members of Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture, NACCIMA, to help find a lasting solution to the prices of cement which have continued to soar everyday. Udenwa who said the government was making effort to ensure that both the citizens and the manufacturers are well protected as regards high cement prices, however accused the NACCIMA members of sabotaging government efforts on cement.
However, for cement consumers, the granting of import licences has done little to influence prices as anticipated, largely on account of the high cost profile of local producers and financial and logistics difficulties confronting those granted the import licences.
An official of Cement Company of Northern Nigeria said in “It is correct that the prices for cement have increased considerably over the past years. If you take CCNN, about 50 per cent of our total costs are related to energy – electric power and fuel. We have our own power station and use diesel to generate electricity. When the oil prices go up, our costs go up, and in order to stay in business we have to increase prices. All the cement companies in Nigeria are in this position. The cost of energy is the biggest driver of cement prices in the country.
Bulk cement importers said that it cost between N326 to N348 per metric tonne to bring in bulk cement, depending on the source, mostly China, and between N326 and N435 per tonne for freight depending on distance and size of vessel. However import related costs such as Nigeria Ports Authority habour dues, Nigerian Maritime Administration and Safety Agency fees, stevedoring charges, cargo dues, security, terminal handling charges, shipping dues among others for imports handled by private terminal operators, which have the draught for large vessels was in the region of N300 per bag.
When other charges, taxes and bank charges are added, import cost amounts to about N600 per bag.
Added to this is the high cost of local transportation, which ranges between N300 and N400 per bag for long distances, due to bad roads. This they say is another major contributor to the high price at depots and retail outlets..
The Minister of Commerce and Industry, Chief Achike Udenwa, had in a chat with Business Editors, said that the Federal Government decided to limit the number of licences for cement importation for two reasons which according to him are the desire to protect local manufacturers against unfair competition and the need to maintain a balance between the national cement demand, which current local manufacturing capacity cannot meet, and affordable price regime.

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