…blame FCCPC for its laxity causing price increase
By Gloria Ikibah
The House of Representatives Joint Committee investigating the “Arbitrary Increase Of Cement Price In The Country” has requested for documents on cost of production from major manufacturers in the industry to justify the price of the commodity in the market.
The Committee criticised the Federal Competition Consumer Protection Commission (FCCPC) for its slackness and inefficiency which significantly contributed to the high cost of the commodity.
This was as the Group Managing Director (GMD) of Dangote Cement Company, Arvind Pathack, and Managing Director of Lafarge Cement, Ibrahim Aminu, were queried by the joint panel chaired by Rep. Jonathan Gaza on Friday.
“We want to make sure they bring the total documents we requested to ascertain their day to day production to be able to have a good idea of how much it actually costs to produce a bag of cement,” Gaza said.
The committee resolved to visit production plants of the companies after going through their books to ascertain the cost of production with a view to determine a fair price of cement for all Nigerians.
The Chairman therefore assured that the efforts of the Committee would see the reduction of the price of cement for the benefit of Nigerians as soon as possible.
He said that the committee is interested in the cost of production from 2020 to date that justified the current price of cement which is over N10,000 in most parts of the country.
He said that the companies should give its average daily consumption of coal, gas, gypsum, limestone, clay, laterite and the average daily production of cement from 2020 to date.
Rep. Gaza said that the companies should provide details of all imported components for the production of cement and their prices from 2020 to date.
The lawmaker said that the companies should also provide details of local components for the production of cement, their prices in naira and dollars if any in the period under review and a summary of the monthly prices and quantity of cement produced from 2019 to date, as well as their audited accounts of the company, bills of laden and duties paid to customs within the period under review.
Rep Gaza also said that the companies should provide details of tax waivers and other incentives enjoyed plus gas and explosives contract details.
The Committee also frowned at excuses of the high cost of foreign exchange by the companies as one of the reasons for the increasing price of cement.
The members of the Committee said this was not tenable as most of the materials for production of cement are sourced locally.
A member of the Committee, Rep. Dabo Ismail, said that Dangote Cement Company had continued to make increasing profits in the country despite being able to source most of its raw materials locally.
He said that in 2022, the company declared a profit of N524 billion, N553 billion in 2023 and have so far made N166.4 billion in 2024.
The lawmaker said that there was no reason why the price of cement will keep rising in the market to the detriment of Nigerians while producers are smiling to the banks.
Earlier, the Group Managing Director (GMD) of Dangote Cement Company, Arvind Pathack said that 95 per cent of production cost are either imported or linked to foreign exchange.
He explained that there had been between 100 to 333 per cent increase in the price of major cement input materials like gas, AGO, gypsum, imported coal, spare parts, new trucks, tyres, petrol among others.
Pathack said that the company is made to pay for some of its contracts in dollars to access gas and explosives for production .
According to him, the provision made by the Central Bank of Nigeria (CBN) was not enough to meet demand so they engage in international sales also sourced from the parallel market.
Adding that logistics issues such as deplorable state of key roads, creates several issues including longer time to deliver, increase in truck maintenance and delivery cost.
The GMD explained that lack of sufficient forex to settle trade obligations had resulted in huge forex losses to a tone of N150 billion a per annum while paying 30 per cent interest rate on loans.
He noted that between May 2023 and June 2024, there has been over 220 per cent devaluation of the Naira among many other challenges like insecurity and public power supply.
Pathack said that the cost of building materials like reinforcement, granite and aluminium window had increased by 177 per cent to 283 per cent while cement had increased by 166 per cent between 2023 and 2024.
He said that cement was being sold at an average cost of 7,200 saying that any price over N10,000 was the handwork of retailers which the company had no control over.
According to him, when converted to dollars a bag of cement is said at $7.8 dollars in Benin, $6.6 in Togo, $7.8 in Ghana, $4.4 in India while that of Nigeria is $4.43, making it one of the cheapest in Africa.
The committee admonished the companies to look into their policy and operations with a view to reduce the price of cement in the country.
Rep. Gaza blamed high price of the commodity on the inaction of Federal Competition Consumer Protection Commission (FCCPC).
He said that as an agency responsible for the protection of consumers, they failed to protect Nigerians against middlemen who sold the commodity for as high as N14,000 after purchasing it for N6,000 at the factory.
“We are extremely hopeful that this engagement will lead to a reduction in the price of cement.
“FCCPC has slept on their functions so far, their inactivity and non responsiveness to price is what has put Nigeria where we are today,” he said.