Chairman of BUA Group, Alhaji AbdulSamad Rabiu has said that cement dealers frustrated efforts of the company to sell cement at N3,500 per bag. Rabiu said this at the 8th Annual General Meeting of the company on Thursday. He said the while the company was willing to sell at N3,500 per bag, dealers were not willing to pass the price reduction to end users, but were selling a bag at between N7000 and N8,000. The company chairman said his company has already sold over a million tons of cement to dealers at N3, 500, per bag before it realised that dealers were selling a bag at between N7000 and N8,000. He said the company had to abandon the policy because its intervention was not to subsidise dealers.
“So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them. Some were selling at N7, 000 and 8 000 per bag. They made a lot of money with the very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing. Rabiu also said the steady depreciation of Naira since last year and the fuel subsidy removal also frustrated the policy. “And also, the devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy. I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy.” If you see the exchange rate then, and the exchange rate today, you will see that cement is actually cheaper today than what it was last year, the reason being that if the dollar was up the costs go up by same margin and the price of cement should actually be, maybe, N10,000 Naira per bag,” he said.
