We have no control over cement prices - Dangote

Dangote Cement Plc on Monday refuted insinuations that it was the main force behind the sharp increase in the retail price of cement, saying it has no control over the industry price and retail price of cement.

The management of Dangote Cement said the price of a bag of cement from its factories and plants across Nigeria as of Monday was N2,450 in Obajana and Gboko, and N2,510 in Ibese, inclusive of Value Added Tax (VAT).

The company decried recent insinuations that it sells cement in Nigeria at significantly higher prices relative to other countries, particularly Ghana and Zambia.

Group Executive Director, Strategy, Portfolio Development & Capital Projects, Dangote Cement Plc, Devakumar Edwin, who spoke at a media parley with senior reporters, explained that while a bag of cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of taxes.

He said though the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the market, noting that it is important to distinguish Dangote’s ex-factory prices from those at which retailers sell cement in the market.

According to him, while Dangote Cement has a 60 per cent share of the market, other companies have the balance.

“DCP has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets,” Edwin said.

He frowned at intentional misinformation or demarketing being allegedly sponsored by some individuals that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

He described the allegation as false, misleading, and unfounded, showing copies of invoices from Nigeria and some other African countries like Cameroun, Ghana, Sierra Leone and Zambia while urging for independent investigations on the prices of cement across the West African coast.

“Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity. To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings. We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country,” Edwin said.

According to him, over the past 15 months, production costs have gone up significantly with about 50 per cent f costs linked to dollar-naira valuation, thus costs of critical components like gas, gypsum, bags, and spare parts have increased significantly due to the devaluation of the naira and VAT increase.

He noted that in spite of the challenges, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.

“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” Edwin said.