The joint committee of the House of Representatives investigating the arbitrary rise in cement prices in the country has requested major producers to submit documents detailing their production costs to justify the current market prices.
The committee, chaired by Jonathan Gaza (APC-Nasarawa), decided to visit production plants after reviewing the companies’ financial records to determine a fair price for cement for Nigerians. This decision was announced on Friday during a public hearing where Dangote Cement Company and Lafarge Africa Plc were questioned in Abuja.
Gaza emphasized the committee’s interest in understanding the cost of production from 2020 to the present, given that cement prices now exceed N10,000 in many parts of the country. He requested detailed information on the average daily consumption of raw materials like coal, gas, gypsum, limestone, clay, and laterite, as well as daily cement production figures from 2020 onward.
The companies were also asked to provide details of all imported and local components used in cement production, including their costs in both naira and dollars, and to summarize monthly cement prices and production quantities from 2019 to date. Additionally, the committee requested the companies’ audited accounts, bills of lading, customs duties paid, tax waivers, and details of any incentives, gas, and explosives contracts.
Committee member Dabo Ismail (APC-Bauchi) highlighted Dangote Cement’s increasing profits, which were N524 billion in 2022, N553 billion in 2023, and N166.4 billion so far in 2024, despite sourcing most raw materials locally. He questioned the justification for rising cement prices while producers continued to profit.
Arvind Pathack, Group Managing Director of Dangote Cement, explained that 95% of production costs are linked to imports or foreign exchange. He cited a significant increase in the prices of key inputs like gas, AGO, gypsum, imported coal, spare parts, new trucks, and petrol. Pathack noted the company’s reliance on the parallel market for foreign exchange due to insufficient provisions from the Central Bank of Nigeria.
Pathack also discussed logistical issues, such as the poor state of key roads, which increase delivery times and maintenance costs, and the lack of sufficient foreign exchange to settle trade obligations, resulting in annual forex losses of N150 billion and high-interest loans at 30%.
He highlighted the challenges of insecurity, public power supply, and significant increases in the costs of building materials, which have risen by 177% to 283% from 2023 to 2024. Pathack stated that cement sold for an average of N7,200 per bag, and prices exceeding N10,000 were due to retailers, not the company. He noted that, in dollar terms, cement prices in Nigeria are among the cheapest in Africa.
The committee urged the companies to review their policies and operations to reduce cement prices in the country. Gaza, in an interview with journalists, expressed hope that the engagement would lead to lower cement prices. He criticized the Federal Competition Consumer Protection Commission (FCCPC) for failing to protect consumers against middlemen who sell cement at exorbitant prices, sometimes 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 lack of responsiveness to price issues have contributed to the current situation in Nigeria,” Gaza said.
Punch