allAfrica.com: Nigeria: Cement - As FG Sets to Crash Prices (Page 1 of 2)

The issue of high price of cement in the country came to the fore last week when the Federal government took a bold step in its attempt to address the problem which has deprived the average Nigerian an opportunity to own a house.

Part of the Federal government's short term intervention measure was to bring in more stakeholders to complement the existing ones in the sector.

To demonstrate this resolve, the government, last week through the Minister of Commerce and Industries, Engr. Charles C. Ogwu, issued import licenses to six new companies to enable them import the product to create availability, accessibility and to force the price down.

The six new companies include; MINAJ Holdings Ltd. Enugu, Madwell Products Sapele, BUA Inter. Ltd. Kano, NICA Ltd. Maiduguri, Reagan Renaissance Ltd. Calabar and MAAN Labadi (Zane cement) Lagos.

It should be noted that before the development, the responsibility to manufacture and import in the sector was left with seven companies, namely; Wapco/Lafarge, Ashaka cement, Benue cement company (Dangote),Obajana cement (Dangote),UNICEM, Calabar, Cement company of Northern Nigeria, Sokoto and DURECHEM, Ogun state.

Speaking shortly after the presentation of the licenses, the Minister of Commerce and Industry, together with the newly licenced companies, assured Nigerians that in the next six weeks or forty days, the price of cement is going to crash down to about N1,150 as against N2,000 in the market.

The minister explained that the president approved the issuance of the import permits to additional six companies that are already in the manufacture of the product as part of the demonstration and commitment of the federal government to support local production.

He said, "you cannot base the supply of cement entirely on import but on local production because cement is a very cheap product but unfortunately, it has become gold in Nigeria and the price is as high as over N2000.It is the intention of government to bring the price down, create availability and regular supply of the product in the country."

He said the importers are going to import cement from countries that the product is very cheap, adding that the new companies are geographically well spread across the country and have access to ports and other logistics that will facilitate the shipment.

The minister used the opportunity to deny any personal interest in the choice of the new companies, saying all the companies had been in existence in the past ten years and promised to resign if anybody proves that he or any member of his family has any equity interest in any of the companies.

Speaking on behalf of the newly license companies, the President, Sapela Chambers of Commerce, Mines and Agriculture and Chief Executive of Madwell Product Ltd, Mr. David Iweta, said the significance of the initiative is to enable the federal government achieve its programme of houses for all.

He said, "the country has a shortfall of 16million houses for our people and the prices of apartments are so high that for a single bedroom, you pay N2000 per month and people earn N6000 as salary. So when you pull that out, how then do you take care of your other expenses."

Mr. Iweta said the major problem of the high price of cement in the country is the existence of a very strong cartel that deprives a lot of people with good ideas and investment plans with funding opportunities from coming into the sector.

He said, "I have established a cement plant in Sapele, Delta State, since 2002 but have never been privileged to be granted licence and my plant has been idle. My company is the only one that came in from the United States of America and I'm the first African to obtain the US EX-IM bank facility."

Mr. Iweta said they are quite certain of the crash in cement prices immediately they bring in the product into the country and target between 50-100% reduction.

He said, "as we speak, the CNF price of cement including duties should not be more than N700 into this country and plus or minus, we should be looking at about N1, 000 per bag and when other stakeholders start coming and there is healthy competition, not protecting a few as in the past, people should work straight into a factory, issue their cheques and go out with their bags of cement."

He ruled out the possibility of the cartel bouncing back and sabotaging the efforts, saying Nigerians are going to fight them because they have suffered through high prices of cement for too long.

"It has led to projects failure, contract variations, upward review of prices, and many abandoned projects."

Also contributing, one of the new investors, Abdusamad Rabiu of BUA Group from Kano, said his company has been into the importation of cement a long time ago but could not go into bulk importation due to lack of permit.

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