Vanguard (Lagos)

5 July 2009

Nigeria: Dangote Wants Cement Import Banned

Lagos — Cement manufacturers in the country have petitioned the Presidency alleging that the Ministry of Commerce had opened the gate for the importation of the product into the country, thus jeopardising their investments.

The petition, spearheaded by Alhaji Aliko Dangote is currently receiving the attention of President Umaru Yar'Adua, who has directed the Minister of Finance, Mr. Mansur Mukhtar, to constiuting the Committee, the Minister of Finance is on a fact-finding tour of cement plants in the country.

The minister has already visited the Ewekoro cement factory and was billed to visit the Obajana plant at the weekend.

FG may review policy on cement imports

Dangote and his co-cement manufacturers alleged in the petition that the Ministry of Commerce and Industry had allowed the importation of cement into the country at the expense of local manufacturers.

The petitioners, it was learnt, argued that local manufacturers had invested a lot in machinery and equipment to set up factories to produce cement locally.

They also said that government had not given enough incentives to local producers but only policies that tended to work against manufacturing in the country.

Although, they said they were not against importation as such, they are, however, asking government to put in place measures that will encourage importers to set up manufacturing facilities in the country.

Prices of cement have been on the rise and government, in a bid to check trend, gave import licence to some Nigerians to import the commodity with a view to bringing down its price.

As a result, President Yar'Adua had last year lifted the ban on importation of bulk cement and granted import licences to six new firms along with the existing cement manufacturers to flood the market with the product and force prices down.

Cement price rises

Then Minister of Commerce and Industry, Chief Charles Ugwuh, had said the decision was to make up for the 11.5 million tonnes per year shortfall in the cement market.

Local operators, data showed, were only able to supply about 6.5 million tonnes of the installed capacity of 9 million metric tonnes into the Nigerian market while total national demand was estimated at between 18 and 20 million tonnes per year.

The six new companies that got the import licences to complement existing ones are: Minaj Holdings Limited, Enugu; Madewell Products, Sapele; BUA International Limited, Kano; NICA Limited, Maiduguri; Reagan Renaissance Limited, Calabar and MAAN Labadi, Lagos.

They joined the seven existing players -- Lafarge Cement WAPCO Nigeria, Ashaka Cement, Benue Cement Company, Obajana Cement, UNICEM Calabar, Cement Company of Northern Nigeria, Sokoto and DURECHEM, Ogun State.

But up till now the prices of cement is still about N2,000 per bag.

Govt appeals to NACCIMA

Following the intractable problem created by rising cement prices in the country, Minister of Commerce and Industry, Achike Udenwa, recently appealed to members of the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), to help find a lasting solution to the price of cement which has continued to soar everyday.

Udenwa, who said the government was making efforts to ensure that the citizens and the manufacturers are well protected as regards high cement price, however, accused the NACCIMA members of sabotaging government's efforts on cement.

However, for cement consumers, the granting of import licences has done little to influence prices as anticipated, largely on account of the high cost profile of local producers and financial and logistics difficulties confronting those granted the import licences.

An official of Cement Company of Northern Nigeria (CCNN), said: "It is correct that the prices for cement have increased considerably over the past years.

"If you take NCCNN, for instance, about 50 per cent of our total costs are related to energy - electric power and fuel. We have our own power station and use diesel to generate electricity.

"When the oil prices go up, our costs go up, and in order to stay in business, we have to increase prices. All the cement companies in Nigeria are in this position. The cost of energy is the biggest driver of cement prices in the country."

Bulk cement importers said that it costs between N326 and N348 per metric tonne to bring in bulk cement, depending on the source, mostly China, and between N326 and N435 per tonne for freight depending on distance and size of vessel.

However, import-related costs such as Nigerian Ports Authority harbour dues, Nigerian Maritime Administration and Safety Agency fees, stevedoring charges, cargo dues, security, terminal handling charges, shipping dues, among others, for imports handled by private terminal operators, which have the draught for large vessels was in the region of N300 per bag.

When other charges, taxes and bank charges are added, import cost amounts to about N600 per bag.

Added to this is the high cost of local transportation, which ranges between N300 and N400 per bag for long distances, due to bad roads.

This they say is another major contributor to the high price at depots and retail outlets.

The Minister of Commerce and Industry, Chief Achike Udenwa, had in a chat with Business Editors, said that the Federal Government decided to limit the number of licences for cement importation for two reasons which according to him are the desire to protect local manufacturers against unfair competition and the need to maintain a balance between the national cement demand, which current local manufacturing capacity cannot meet, and affordable price regime.

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