Dangote, BUA Cement spent N263 billion on fuel, power in nine months as inflation soars

Dangote Cement Plc and BUA Cement Plc spent a whopping sum of N263.157 billion on fuel and power during the nine months that ended September 30, 2022. This represents a 44.31% increment from N182.355 billion recorded during the comparable period of 2021.

The figure also represents 42% of the total cost of sales of N626.660 billion recorded by the cement companies during the period under review. Some of these cost pressures were due to the depreciation of the naira and macroeconomic inflationary pressure, especially in the domestic market where average inflation heightened.

Regardless of the high cost of sales which swallowed much of the companies’ earnings and stood at N626.660 billion, they both managed to generate a combined profit after tax of N287.115 billion, according to data tracked by Nairametrics.

Nigerian manufacturers are yet to witness appreciable improvement in electricity supply years after Nigeria’s power sector was privatised. As a result, they are forced to generate their electricity for themselves, albeit at very high costs. Power constitutes the single most critical infrastructure needed to boost the manufacturing sector and create jobs.

Comments of Dangote Cement CEO

The Chief Executive Officer of Dangote Cement, Michel Puchercos, while commenting on the third quarter results explained that “to mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels.

“So far this year, we have co-processed 101,553 tonnes of waste, representing a 77% increase in 2021. We are on track to commission our alternative fuel feed system at Obajana lines I and V, and Ibese line II in November. In addition, we are ramping up our investment in compressed natural gas, CNG, to reduce our AGO usage.”

He further explained that the company recorded an increase in revenue of N1,177.3 billion, up 15.2% compared to last year.

Comments of BUA CEO

The Chief Executive Officer of BUA Cement, Mr Yusuf Binji, said during a conference call that the cement maker has resorted to the use of locally sourced coal and liquefied natural gas in favour of imported coal, in its efforts to withstand the stress in the foreign exchange market.

Comments of BUA corporate affairs manager

The corporate affairs manager of BUA Cement, Mr O’tega Ogra, in a report cited by Nairametrics, said: “BUA Cement’s switch to LNG at our Sokoto plant was a strategic decision done for efficiency gains and to reduce our foreign exposure on coal imports since LNG can be sourced locally.

“We started the conversion of the plant last year and it is now completed. BUA Cement’s Sokoto plant now runs on locally sourced coal and LNG rather than the previous mix of local and foreign-sourced coal and LPFO. LNG will also be used to power engines used in generating electricity and will replace LPFO and AGO.
“Additionally, the use of LNG will reduce our carbon footprint and conserve the environment in line with our commitment to environmental sustainability and the Paris Accord of which Nigeria is a signatory.”