By Adedapo Adesanya
The House of Representatives Joint Committee investigating the arbitrary increase in cement prices in the country has demanded the correct production cost from major industry manufacturers, including Dangote Cement, which has the largest market share in the country.
The Chairman of the Committee, Mr Jonathan Gaza, who made the demand at their investigation at the weekend said, ‘We want to make sure they bring the total documents we requested to ascertain their day-to-day production to be able to have a good idea of how much it actually costs to produce a bag of cement.”
Mr Gaza assured that the efforts of the Committee would see the reduction of the price of cement for the benefit of Nigerians as soon as possible.
He said that the committee is interested in the cost of production from 2020 to date that justified the current price of cement which is over N10,000 in most parts of the country.
The lawmaker further asked the companies should give their average daily consumption of coal, gas, gypsum, limestone, clay, and laterite and the average daily production of cement from 2020 to date.
Mr Gaza said that the companies should provide details of all imported components for the production of cement and their prices from 2020 to date.
Testifying before the committee, the Group Managing Director (GMD) of Dangote Cement, Mr Arvind Pathak, said 95 per cent of production costs are either imported or linked to foreign exchange.
According to him, there had been between 100 to 333 per cent increase in the price of major cement input materials like gas, automotive gas oil (AGO) or diesel, gypsum, imported coal, spare parts, new trucks, tyres, and petrol.
He disclosed that the company is made to pay for some of its contracts in dollars to access gas and explosives for production.
He said the provision made by the Central Bank of Nigeria (CBN) was not enough to meet demand so they engage in international sales also sourced from the parallel market.
He said logistics issues such as the deplorable state of key roads, create several issues including a longer time to deliver, and an increase in truck maintenance and delivery costs.
The GMD explained that the lack of sufficient forex to settle trade obligations had resulted in huge forex losses to a tone of N150 billion per annum while paying a 30 per cent interest rate on loans.
He said between May 2023 and June 2024, there has been over 220 per cent devaluation of the Naira among many other challenges like insecurity and public power supply.
Mr Pathak said that the cost of building materials like reinforcement, granite and aluminium windows had increased by 177 per cent to 283 per cent while cement had increased by 166 per cent between 2023 and 2024.
