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The Joint Committee of the House of Representatives investigating the arbitrary rise in cement prices has demanded that major producers provide documents on production costs to justify the current market price. This was announced by Rep. Jonathan Gaza (APC-Nasarawa), Chairman of the Joint Committee, during a public hearing in Abuja on Friday.
The committee plans to visit the production plants of companies like Dangote Cement Company and Lafarge Africa PLC to verify the cost of production and determine a fair price for cement in Nigeria. Gaza highlighted the need for detailed information on the companies’ average daily consumption of coal, gas, gypsum, limestone, clay, and laterite, as well as their average daily production of cement from 2020 to date.
He also requested data on imported and local components used in cement production, including their prices in both naira and dollars. Additionally, the companies are to provide a summary of monthly prices and quantities of cement produced from 2019 to date, along with their audited accounts, bills of lading, and duties paid to customs during the period under review.
Gaza emphasized the need for transparency regarding tax waivers and other incentives enjoyed by the companies, as well as gas and explosives contract details.
Rep. Dabo Ismail (APC-Bauchi State) noted that despite sourcing most raw materials locally, Dangote Cement Company continued to post significant profits, questioning the justification for the rising cement prices. In 2022, Dangote Cement declared a profit of N524 billion, which increased to N553 billion in 2023, with a profit of N166.4 billion so far in 2024.
Dangote Cement’s Group Managing Director, Arvind Pathack, attributed the price hike to several factors, including a 100 to 333 percent increase in the cost of key input materials like gas, AGO, gypsum, imported coal, spare parts, new trucks, and tyres. Pathack explained that 95 percent of production costs are either imported or linked to forex, with insufficient forex provision from the Central Bank of Nigeria (CBN) forcing the company to engage in international sales and source from the parallel market.
Pathack also cited logistics issues such as poor road conditions, longer delivery times, increased truck maintenance, and higher delivery costs. He added that a lack of sufficient forex to settle trade obligations had resulted in forex losses of N150 billion per annum, coupled with a 30 percent interest rate on loans.
Despite these challenges, Pathack claimed that cement prices in Nigeria, when converted to dollars, were among the cheapest in Africa, with a bag of cement selling for $4.43 compared to $7.8 in Benin, $6.6 in Togo, $7.8 in Ghana, and $4.4 in India.
The committee urged cement companies to review their policies and operations to reduce prices. Chairman Gaza expressed hope that the engagement would lead to a price reduction, blaming the high costs on the Federal Competition Consumer Protection Commission’s (FCCPC) inaction. He criticized the FCCPC for failing to protect consumers against middlemen who significantly mark up cement prices.
“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 non-responsiveness to price is what has put Nigeria where we are today,” Gaza stated.
