Leadership (Abuja)

Nigeria: Cement Glut - Ibeto Debunks Dangote's Claim On Imports

The Ibeto Cement Company has dismissed allegations by the Dangote Group that the nation's cement market has been flooded with imported products resulting in a glut, stating that there is no way the volume of cement imported by their company can induce any form of surplus.

In a statement by signed by its executive director of strategy and public affairs, Dr. Ben Aghazu, and made available to LEADERSHIP, the group also dismissed the announcement of the closure of Benue Cement Company (BCC) on account of the 'phantom' glut, describing it as false.

"Time and unfolding events will show that Dangote Group is being economical with the truth in this assertion. We have it on good authority that the Dangote plant in Gboko (BCC) is programmed to shut down for turnaround maintenance only, and will resume production when the maintenance has been completed," the statement said.

In further clarification, the group, which held that a glut is an economic phenomenon that results when a market is excessively supplied with a particular product, stated that the first evidence of such a situation is the drastic reduction in the price of the product. It noted this has not been the case of cement which is still costlier in Nigeria than any other nation in the world.

Aghazu noted that through a consent judgement entered by the Federal High Court to settle the dispute between the federal government and Ibeto Cement Company, the firm is currently the only authorized importer of bulk cement in the country.

Explaining how the consent judgement came about, Aghazu said the federal government had issued a guarantee to Ibeto Cement Company Limited that the company's proposed cement bagging plant in Bundu Ama, near Port Harcourt, shall operate for a minimum period of 10 years from commissioning so as to meet the strict funding requirements of the lending institutions.

The federal government had also encouraged the company with appropriate incentives such as reduced duty on imported equipment and waiver of Value Added Tax (VAT).

"However, in September 2005, a mere three months after our gleaming new plant began operation, the cement cartel, led by Dangote Cement, used its reach in the federal government, to unjustifiably and unexplainably close down the operation of the Ibeto bagging plant," he said.

Aghazu further noted that after various efforts of appeal to the federal government failed, the company went to court in 2006 to seek justice and the dispute was finally settled out of court after extensive negotiations involving all relevant MDAs.

"In the judgement order, the federal government acknowledged that the Ibeto Cement Company Bagging Plant was unjustifiably closed down. The government also acknowledged the enormous losses suffered by Ibeto Cement Company from the unjustified closure from 2005 to October 2007," he said.

Part of the judgement order states that cement firm would be allowed to import 1.5 million tonnes of bulk cement per annum for the period from October 1, 2007 - September 30, 2017 in line with the federal government guarantee conveyed in the ministry of Industry letters, reference HMSI/EXT/CORR/VOL.X/350 of June 5, 2002 and HMSI/EXT.CORR/VOL.XII/127 of November 29, 2002.

With this judgement making Ibeto Group the sole importer of cement into the country for the specified period, the company argued that 1.5 million tonnes, which is less than five percent of the annual cement supply to the Nigerian market, cannot create a glut.

Aghazu accused Dangote Group of trying to influence the federal government to, in effect, invalidate the court order that authorised Ibeto Group to import this amount of cement until September 30, 2017, by raising the duty and other taxes on imported cement so as to make the imported cement more expensive than Dangote cement.

Decrying Dangote Group's monopolistic tendencies, Aghazu said that based on published reports, Dangote Group occupies the first position in the market share of several essential commodities.

He said a Dangote report, published in 2006, showed that Dangote held 81 percent of the Nigerian sugar market, 40 percent of the cement market, 33 percent of flour, 54 percent of pasta and 72 percent of salt

"The latest figure indicates that the Dangote Group still maintains the first position in each of these commodities. It now controlling about 93 percent of the sugar market, 86 percent of cement, 73 percent of flour, 74 percent of pasta and 89 percent of salt," he said.

The Ibeto Group stated that it was imperative to alert the nation on the strategic risk posed by the situation.

"We venture to assert that based on Dangote Group's actions as it pertains to Ibeto Cement Company Ltd, the primary strategy of the Dangote Group in business is to use all available forces in the environment to make sure that it does not have any competition. In other words, they must operate as monopolists. Consequently, their roads to success are littered with the remains of would-be or attempted competitors," he stated.

The company stated further that "in order to reduce the adverse effect of monopolies, for safety reasons and in the interest of the common good, some countries have, and enforce, anti-trust laws that control how much of any strategic market an individual or corporation is allowed to control.

"Unfortunately, in our country, the anti-trust laws probably don't exist or aren't enforced when it pertains to the Dangote Group which holds a monopolistic stranglehold on several significant and strategic sectors of the economy.

"For example, the President of the Dangote Group, Alhaji Aliko Dangote, is also the President of the Nigerian Stock Exchange, where his companies control some 35% of the total stock value of the Exchange. This situation ought to be very troubling to all knowledgeable and patriotic Nigerians," he revealed.

Aghazu further called on relevant bodies - the Nigerian Bar Association, the Nigerian Economic Society, Nigeria Institute of Directors, Securities and Exchange Commission and members of the National Assembly - to look into the dangerous effects of monopolies on the economic wellbeing of the country.

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