Confusion trails Dangote cement price review

Developers and prospective developers were jubilant when Dangote Cement announced on September 4, 2014 that its product’s price was reviewed downward. The Group Managing Director of Dangote Cement, Mr Devakumar Edwin announced reduction in company price. The 50kg of 32.5 grade of cement was N1,000 while 42.5 grade was N1,150 from factory, excluding five percent […]

Developers and prospective developers were jubilant when Dangote Cement announced on September 4, 2014 that its product’s price was reviewed downward. The Group Managing Director of Dangote Cement, Mr Devakumar Edwin announced reduction in company price. The 50kg of 32.5 grade of cement was N1,000 while 42.5 grade was N1,150 from factory, excluding five percent VAT and transport charge. Following this announcement, retail prices went down to between N1,350 and N1,500 from earlier N1,800/N2000.
Observers were of the view that, cement being one of the major components in building construction will go a long way in reducing cost of house ownership among Nigerians. President of the Nigerian Institute of Architects (NIA), Bruno Niyi, was quoted to have commended Dangote Cement Plc for the price reduction and urged the management of the company to sustain the new price regime and ensure it is not hijacked by profiteers.
Penultimate week, cement retail price was around N1,500, about 50 percent above the company price. However, last Monday, those who went to buy the commodity complained that Dangote price had returned to its old rate.
It started when truck drivers conveying Dangote cement refused to offload the product due to speculations that management of Dangote Cement had increased price. One of the drivers who gave his name as Musa Ahmadu declined to offload the commodity in Utako area of Abuja saying he had got information that management of Dangote Cement had increased prices.
“I have to park my trailer here because my boss gave me instruction not to offload yet even though I’m at the spot where the cement is meant to be offloaded. Price of the cement has also increased due to the report,” Ahmadu said.
Similarly, many trailers loaded with Dangote cement stopped in Gwagawalada, a satellite town in the Federal Capital Territory (FCT) awaiting further instructions on what to do.
Abuja cement dealer, Johnson Omotayo said the fear of the increase made everyone to hike the price. “Many people want to make money out of it if it’s eventually true. You buy at old rate and sell at new rate thereby multiplying your profit on each sale. That is the method that is playing out,” he said.
Group Head, Corporate Communications of Dangote Industrial Limited, Mr. Anthony Chiejina would not confirm the development. But a source in the company confirmed that the company had reviewed upward cost of its product. The source said the review varies according to the zones of the country. In Abuja, the source said it is N1,795 per bag of 42.5 grade. This includes transport cost borne by Dangote Cement.
Raging controversies  
Before Dangote Cement announced its price slash, it had come up with what it called cement upgrade resulting in what was termed 32.5 and 42.5 MPA. The company argued that building collapse incidents in the country were caused by application of inappropriate cement grades. Controversy raged for months over this. Some stakeholders described the cement grading as a move towards creating a monopoly in the cement market. But Dangote Cement’s position got a boost when the Standards Organisation of Nigeria (SON) directed cement producers to upgrade like Dangote Cement had done.
Early this month, a human rights group, Alliance Against Monopoly (AAM) sued SON for its directive to cement manufacturers on industry standards. In an originating summons and affidavit of claims filed before the court, the plaintiff sought a declaration among other things that SON is strictly bound and its functions wholly circumscribed by its enabling Act and anything done or proposed to be done by it in contravention of the provisions of that Act is ultra vires of its statutory powers and is therefore of no effect.
The plaintiff sought a declaration of the court that no industrial standards or prescription under the SON Act can be binding on manufacturers unless such standards or prescriptions are duly declared as binding on manufacturers by the Minister of Industries (or minister in charge of industries) pursuant to Section 16(7) (a)-(c) of the Standards Organisation Act. Justice Saliu Saidu fixed hearing of the suit on January 7, 2015.
Abuja based developer, Arc Bashir Haiba who is Managing Director of Abuja Property Development Company (APDC) feels that cement should sell a little above N1,000. He said, “It’s a good thing if cement can come down to a little bit above N1,000. Sustainability of a certain price is a factor of production cost, a factor of type, a factor prevailing economic indices. The price can be even lower. Now a barrel of oil is less than $60.”

It’s N1,700 in Accra, Ghana
The Dangote Portland Cement currently has a major stake in the Ghanaian market with an average output of 80,000 tonnes from its sole plant at Tema. This brand’s visibility is

second only to indigenous Ghanacem, which has continued to outpace its competitors in the local market in production output and sales.
According to Sales and Marketing Manager of Dangote Cement, Joseph Kobina Abu, the West African cement giant is poised to scale up production to 1.5 million tonnes with the injection of $45 million for the expansion of the plant at Tema and the establishment of a new factory in Takoradi.
Following a directive from the government of Ghana compelling cement companies in the country to reduce by at least GHc2 the unit cost of cement, a bag of Dangote cement sells for GHc 30 to GHc 31.5 (about N1,700) in Accra.
Prices vary in other regions, some marginal while others are high because of the cost of transportation to the inland. For instance, a bag of cement sells for as much as GHc35 in Wa, GHc34.8 in Bolga and GHc34 in Tamale the regional capitals of Upper West, Upper East and the Northern Region.
The cost of Dangote cement is quite competitive and within the range of other top brands like Ghacem and Diamond cement.
Nana Phillip Archer, a major cement distributor laments the prohibitive price of cement in the country, which he blames on the devaluation of the cedi. According to him the cost of cement has almost tripled in the last three years. Godfred Osei, a real estate developer and Chief Executive of Lizngold Group of Companies believes that the high cost of cement has had an adverse effect on business and the growth of the sector in general.
In Kaduna it’s N1,900/N2,000
In Kaduna, the price of Dangote cement which ranged between N1,500 and N1,600 moved last week to N1,900 and N2,000 depending on the seller. Our reporter who visited some of the cement shops observed that different sellers hold different views about the reduction of cement price by Dangote Cement.
It was apparent many of the sellers don’t get the product directly from the company. While some said the reduction is meant for an old cement which Dangote intended to re-introduce into the market, some said the price actually dropped to N1,000 from the company but gets high after adding cost of transportation, offloading and shop rent among others.
Suleiman Usman, a cement seller on Kano Road in Kaduna said, “I have a boss who supplies the cement to me in bulk. If I give him money for half trailer, he can supply a full trailer to me while I balance up the money later. He gives me at the rate N1,450 a bag. Now we’re talking about two types of cement, there is an old one which Dangote wants to introduce back to the market, which is an ordinary cement, that is the one he reduced to N1,000 but the one we sell at N1,500 is stronger and it has three X meaning extra life, extra strong and extra quality but people don’t understand. In a meeting I attended recently, we the sellers complained over the sudden reduction of price without prior notice and we were told that the cement in question is the old one.
“On Tuesday, after selling about 18bags at N1,500 each, I was called that the price of cement had sky rocketed to N1,900 again due to the rise of dollar,” he said.
Another seller in Karatudu, an area in Chikun Local Government Area, Mr. Abayomi Olatunbosun said the price of cement had increased from N1,500 to N2,000, saying it became N2,000 last Tuesday. “We get cement from Obajana in Kogi State through an agent. With the new price now, we get each bag of cement at the rate N1,850 cost of transportation inclusive. The cost of transportation from Obajana to Kaduna ranges from N120,000 to N170,000 depending on demand while we pay N6,000 to offload from the trailer. When we were selling at N1,500, by our calculation after removing cost of transportation, offloading, shop rent and other expenses, we gain N80 on each bag,” he explained.

N1,900/N2,000 in Lagos
Price of Dangote cement has drastically increased in Lagos and it’s environ ranging between N1,900 and N2,000. According Dangote Cement distributors, the increase was made known to them when they ordered for new consignments.
A distributor who gave her name as Mrs. Awoyinka said, a bag of 42.5 grade of cement from Dangote factory is N1,765 including VAT, transportation, loading and other charges. She said the new price commenced on 16th December, 2014. She said only 42.5 grade is available in the factory.
A contractor who spoke with our correspondent on condition of anonymity expressed discomfort with the price reduction announced by Dangote Cement last two months, saying it caused instability in cement price across the country.

N1,900 in Makurdi
The price of Dangote cement in Benue State has soared 80 percent in the past one week. Buyers of cement in Benue State major towns of Otukpo, Gboko and Makurdi said they have been buying above the stipulated rate.
A major cement dealer in Gboko, Napoleon Okolo told our correspondent that the factory price of the commodity has risen such that he buys a trailer load of 600 bags at between N993,000 and N1.4million which means that a bag will now sell at N1,800 or N1,900 in the open market depending on where he takes it to for sale. He said, “When we bought at N993,000 a trailer, a bag cost N1,350 at factory price so we sold at N1,500. Suddenly, it rose to N1,665 per bag as factory price. We sell at N1,850 in Gboko. It could be more if we transport the product to towns other than Gboko where it’s produced.”
Another seller in New Garage area of Makurdi, Deborah Samson said she sells cement for N1,900 because the factory price had gone up, attributing the hike also to the cost of transporting the products to her warehouse.

N1,800 in Lokoja
In Lokoja, Kogi State, the price of cement has been increased as a 50kg bag now costs N1,800. One of the retailers in Lokoja, Issac John said the price went up last week when Dangote Cement Company increased price. “We were buying a 50kg bag of cement at N1,300 while we sold at the cost of N1,400 but now, the company has increased it to N1,700 and we have increased the price to N1,800,” he said.
Another retailer Eze Chubi said traders were not informed of the increase, they got to know of the price increase when they went to buy new stock from the company in Obajana. Obajana is in Kogi State, where Dangote Cement factory is located. A buyer, Hassan Abu lamented the increase, saying the development will reduce housing projects in the state.