International
Cement dealers concerned over rising costs
13/05/2011 10:28:48 PM
The News Agency Nigeria (NAN) conducted a survey across the country, which showed that cement prices, regardless of different brands, have gone up by an average of 44% in the past four months.
Last December a bag of cement was sold for an average of N1500, today the price averages out to be N2500.Problems of inadequate supply, high transportation cost and policy somersault have all been attributed to causing the situation.The cost of cement has now become a sensitive issue similar to that of petroleum products and food items.The geographically widespread, major cement manufacturers in the country include Ashaka, Ibeto, Burham, Bua, Elephant and Dangote. Dealers have reported that the Dangote brand is the most popular as it is more readily available in the market.A civil servant in Kano, northern Nigeria, Abdulkadir Ibrahim, described the rising prices of cement as “painful and incredible.” He explained: “I am just building a corner shop near my house and it is taking me years to actualise it because of high prices of cement. I used to buy a bag of Dangote cement for N1800 just four months ago, but now it costs N2350.” Ibrahim called on the government to take action.The survey showed that the rising prices are often market induced because of supply deficit.Cement dealers in the southern city of Akure, have confirmed the scarcity of all the brands which affects the prices.Funso Omotola, a dealer on Idanre Road, Akure, reported that the short supply and high demand, meant the price of Elephant cement rose to as high as N2750 in late March.Some stakeholders have alleged that cement manufacturers were taking advantage of the supply gap to increase prices arbitrarily.High transportation cost has been considered a major cause of the recent hike in cement prices.A cement distributor at Kaduna North Railway Station, Abdullrasaq Usman, explained that it used to cost N80 000 to transport 600 bags of cement from Obajana in Kogi State to Kaduna, an approximately 400 km journey. However, due to the scarcity of diesel, it currently costs N300, 000 to transport same quantity to Kaduna, Mr Usman said.“The cost of a trailer load containing 600 bags of cement is N912 000 while transportation cost is N300 000, which makes the unit price N2020 from the manufactures,” he said.Dele Ade-Ojo, an engineer and Head of Works Department at a local government secretariat in Akure told NAN that fluctuations in the cement prices has greatly affected construction works in the council.In order to accommodate the high cost of cement, projects require many more cost variations, the engineer stated.A recent report from Cement Manufacturers Association of Nigeria (CMAN) and Renaissance Capital on the situation in Nigeria confirmed that there was a supply deficit, which local producers had not been able to meet despite investments in new cement plants.“The high costs of doing business in Nigeria and other factors have helped to keep capacity utilisation at an industry average of 68% over the last five years,” CMAN said.PT_Source: worldcement.com