July 28, 2021

Who Will Be Affected Most Between Dangote And BUA As Senate Moves To Cut Cement Price? 

3 min read

Federal Government has concluded plans to introduce liberal policies to stimulate more investment in the manufacturing of the product.The move is to cut the skyrocketing costs of cement.

It began yesterday at the National Assembly. The upper chamber said such policies should include provision of industrial and larger tax incentives to encourage local investments in cement production in Nigeria.

The resolution was sequel to the consideration of a motion titled: “Need for liberalisation of cement policy in Nigeria”, sponsored by Senator Ashiru Oyelola Yisa and five others.

The co-sponsors of the motion are: Senators Muhammad Enagi Bima (Niger South); Adelere Adeyemi Oriolowo (Osun West); Samuel Egwu (Ebonyi North); Kabiru Gaya (Kano South) and Michael Nnachi (Ebonyi South).

The question now is if this should become a reality, who between Dangote and BUA will enjoy more patronage.

In his lead debate, Senator Yisa identified cement as one of the few building materials in which Nigeria enjoys  self-sufficiency.

Yisa said: “As at 2018, the installed capacity of cement producers was about 47.8 million metric tonnes (MMT) which is far above the estimated (2018) consumption of about 20.7MMT.

“Yet, the prices of cement in Nigeria- (N380) – is about 240 per cent higher than the global average.

“Cognizant that cement takes a large share of domestic expenditure and the price of each commodity significantly impacts the government’s ability to provide much-needed infrastructural works required for the growth of our economy.

“Further cognizant that the recent increase in price of cement (from N2, 600 to N3, 800) slowed down the amount of construction work being embarked upon, thus negatively affecting labour engagement and almost collapsed the procurement plan of the governments in 2020 Appropriation Act.

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“Mindful that the Nigerian cement market is oligopolistic in nature with three players (Dangote Cement (60.6 per cent); Lafarge Africa Plc (21.8 per cent) and BUA Group (17.6 per cent), largely dominating the scene therefore making it susceptible to price fixing practices.

“I am convinced that if the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally.

“We should be worried that the significant rise in cement prices in the country and the low purchasing power of Nigerians may result in substandard building constructions and non-completion of planned infrastructural works.

“It’s strongly believed that there is an urgent need to encourage more local production of cement to satisfy the demands of Nigeria with a steady growth rate of approximately three per cent per annum; a housing deficit of 30 million units and less engagement of over 10.5 million workforce of the building and construction industry.

“It’s further strongly believed that unfavourable government policies such as imposition of multiple taxes, erratic power supply, government ban on importation in violation of ECOWAS Trade Liberalisation Scheme (ETLS) and subsequent lifting of importation in favour of few producers have negative implications on the growth of our infrastructures.”

In its resolution, the Senate called on the Federal Government to provide more industrial incentives and industrial protections, such as concessionary loans and huge tax incentives for new entrants in order to boost production of cements, reduce price and encourage more valuable producers in Nige

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