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Cement: How dealers frustrated our N3,500/ bag policy – BUA

Published

3 weeks ago

August 30, 2024

Admin

The Chairman of BUA Cement, Alh. Abdul Samad Rabiu, yesterday recounted how cement dealers frustrated his company’s N3, 500/bag policy, last year.

He spoke at the 8th Annual General Meeting of the company in Abuja.

He said that while his company sold over a million tones of cement to dealers at N3, 500, per bag, with the intention that they would pass the benefits to end-users, the dealers sold a bag of cement to consumers at as high as N7000 and N8,000.

A ton is equal to 20 bags of 50 kg weight.

He said the company had to discontinue the policy as its intervention was not to subsidise dealers.

According to him, BUA Cement could not stop the dealers whom he said made huge profits from the high margin because the company had no control over prices in the open market.

He added that the Naira devaluation last year and the fuel subsidy removal also played roles in making the policy unsustainable.

Alh Rabiu said, “We were selling cement at N3,500 with the expectation that the dealers and the retailers would pass the benefits of the low price to the end-user customers.

“It’s such that whatever price you sell cement at, you pay. It doesn’t matter what happens if the price doubles or triples if it’s less than that. So, we didn’t actually have that price.

“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 from.the very high margin. I think we had sold more than a million tons, yes at N3,500 before we realised what the dealers were doing.”

“And then, because of the issues that Nigeria faced at the time about devaluation of the.Naira last year and the removal of fuel subsidy, we could not continue that policy.

“We wanted that price to stay at that level but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers. We are subsidizing the dealers.

“So, I’m referring to the point where the FX rates, the exchange rates, from when we decided to sell it at N3,500, the rate was about N600 to maybe N1,800, N1,900 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price.”

The Chairman said, however, that the company had continued to work towards making that prices did not escalate at levels of the percentage increase of the Naira devaluation.

His words, “If you see the exchange rate then, and the exchange rate today, we see that cement is actually cheaper today than what it was last year.

“The reason being that if the dollar was up, so we see there is, the price of cement should actually be maybe N10,000 Naira per bag. The dollar exchange rate has actually been goin up you know. The price of cement, if you take the N4,000 that it was in the beginning of last year, at 4,000 .and today’s N6,000, it’s only 50% increase.

“So, we directly pushed to ensure that the price of cement is not getting higher than what it is today.

“But then again, you have areas where everything is dollar-dominated. Energy is the biggest cost. You know, it’s not correct.

“And our energy today is denominated in dollars. We buy gas to power our plants mainly. And gas is priced in dollars.”

The Chairman revealed that one of BUA’s plants monthly invoice, NGKW is about N15 billion Naira for one plant, one factory.

Maybe N16 billion monthly. It used to be N3 or N4 billion Naira. That is just one example.”

According to the financial report presented by the Board of the company, the company recorded a strong revenue growth of 27.4% to N460 billion (2022: N361 billion), resulting from its increasing market share.

However, with the devaluation of the Naira in June 2023, and its continued depreciation, as well as growing inflation, the Company experienced increasing price pressures which affected production costs, which increased by 39.5% to N276 billion (2022: N197.9 billion).

Within this period under review, a net foreign exchange loss of N70 billion (2022: N5.5 billion) was recorded, with N52.5 billion attributed to finance costs.

This was associated with the construction of an additional 3mmtpa lines at Obu and Sokoto, and the sum of N17.5 billion was attributed to foreign trade payables.

Despite these challenges, the Company reported a net profit after tax of N69.5 billion and declared a N2 dividend per share.

News

Just in: Dangote Petrol Now Available at N765.99 Per Litre

Published

50 seconds ago

September 20, 2024

Naijablitznews

By Mario Deepromoter

11plc, Total Energies, AA Rano, and other marketers have begun lifting Dangote Petrol through Nigerian National Company (NNPC) Trading Limited for N765.99 to retail outlets nationwide.

Findings showed some petroleum marketers who were able to complete their payment process on the NNPC trading payment portal commenced the lifting of petrol earlier this week under the existing agreement between marketers and the refinery.

Tunji Oyebanji, managing director, 11Plc confirmed to BusinessDay on Thursday evening that some marketers have started lifting the products at N765.99 from Dangote Refinery through NNPC who remain the sole off-taker of product.

“We were among the first marketers to complete the payment on the NNPC portal. We have no direct arrangement with the refinery,” Oyebanji said.

It was gathered that NNPC Retail, 11plc, Total Energies, A.A Rano are among the marketers that have picked up products from the refinery.

He added, “We don’t know the contractual financial arrangement between NNPC and the refinery but what I can confirm is we are buying at N765.99 from NNPC to lift Dangote petrol”.

Efforts to get the Independent Petroleum Marketers Association of Nigeria (IPMAN) to confirm if its members have picked up products at the Dangote Refinery proved abortive at the time of writing this report.

See also Nigeria’s Petrol Landing Cost Revealed
Adedapo Segun, executive vice-president, downstream at NNPC said marketers cannot purchase petrol directly from the refinery because the product is still sold at a subsidised rate.

“That is the same thing happening with Dangote. I said earlier that Dangote is a company and it is going to sell at market price,” he told Journalists.

According to Segun, “The market value of PMS is still higher than what N766 or N765 or N799 that NNPC is selling.

“The situation has not changed there. So, NNPC’s off-taking is only because the others would not buy at the price Dangote will be willing to sell, which is reasonable.

“As soon as the price allows for it, you will see the marketers go to Dangote and buy.”

News

Our Country Is Bankrupt – Governor Obaseki

Published

14 mins ago

September 20, 2024

Austin Ojomah

By Ojomah Austin.

Gov. Godwin Obaseki of Edo state has stated that “Nigeria is technically bankrupt” during an interview on Channels Television’s Politics, while elaborating on his concerns over the country’s financial health.

While criticising the Federal Government for being stuck in the past, the governor emphasized the urgent need for restructuring to facilitate progress.

“You restructure your affairs so that you can reorganize and be able to meet your obligations. But Nigeria is still behaving as if they have money like it used to.

“Nigeria has been in trouble for a while. We don’t have enough to cover our expenditures and we are not reducing our expenditures and we are not earning more. The federal government does not have the capacity anymore to manage the economy”.

News

Few Hours To Edo Election, Governorship Candidate Withdraws

Published

17 mins ago

September 20, 2024

Austin Ojomah

The governorship candidate of the Accord Party, Kennedy Iyere, has officially withdrawn from the upcoming 2024 Edo Gubernatorial election, citing a desire to serve Nigeria at a higher level and address pressing social and economic challenges, particularly the food crisis.

He referenced his previously proposed multi-billion dollar initiative, the ‘Food4All Initiative,’ which he presented to President Bola Tinubu.

This program aims to achieve food security and create mass employment for youth and women through the “One-Family-One-Farmer Scheme.”

In a statement announcing his decision, Iyere highlighted his commitment to leveraging his expertise to implement effective solutions for the country’s challenges.

Iyere also revealed that internal party conflicts played a significant role in his withdrawal, explicitly mentioning a conspiracy involving his running mate, Bright Enabulele, who allegedly sought to undermine his candidacy. ‘

Despite these challenges, Iyere urged voters in Edo State to remain peaceful and vote their conscience, stressing the importance of equitable power rotation among the three Senatorial Districts.

Looking ahead, Iyere expressed his commitment to focusing on national development and assisting the federal government in creating a roadmap for economic inclusion.

He emphasized the need for social intervention programs aimed at engaging and deradicalizing youth.

In closing, Iyere reiterated that his alignment with the Federal Government stems from a selfless desire to serve humanity through public service rather than engaging in partisan politics.

He said, “My focus is no longer on the governorship seat but on a higher and bigger portfolio than a Governor. I want to serve Nigerians at large and not just Edo indigenes. I want to help rebuild Nigeria’s lost economic greatness.

“Serving as a Governor will actually place limitations on me. So, when I saw the plots displayed by Enabulele and some leaders of Accord Party at the State Level, then I knew it was time for me to embrace a higher calling, which was to step up my game to the federal level where I am presently hugely contributing my efforts towards national development.

“I am assisting the federal government to devise a road map for the economic inclusion, engagement, self-emancipation and deradicalisation of youths by designing and driving social intervention programmes that aim to mitigate unemployment and enhance youth and women entrepreneurial opportunities for mass self-employment, wealth creation and poverty alleviation.

“These programmes will fully kick-start in the month of October 2024 and Nigeria will be placed yet again on the pathway of rapid economic recovery. Our intervention programmes will enhance opportunities for youth entrepreneurship engagement in multiple sectors, especially agriculture, food and beverage, technology, entertainment, innovation and creativity.

“More than six million youth and women entrepreneurs (as MSME owners and operators) shall be created or produced within the first one year of the official kick-off of this entrepreneurship programme. Nigerian youths and women lack access to the business capital required as entrepreneurs to either start up a new business or operate an existing business. This programme will squarely address that essential need.”