Senate Rejects Cement Liberalisation, Seeks Incentives for Local Producers
By Adedapo Adesanya
The Senate has declined to advise the federal government to liberalise its current policies on cement production but rather called for more industrial incentives and industrial protections to boost production, reduce price and encourage more valuable producers in the country.
Rather than calling on the central government to lift restrictions placed on licenses, the upper chamber has called on the President Muhammadu Buhari-led administration to offer concessionary loans and larger tax incentives for local players to enter into the cement industry.
The Senate also rejected a call to set up a committee to investigate anti-competitive practices by local cement producers; direct the cement industries in Nigeria to increase their production, and reduce the price of the commodity.
These followed a motion titled Need for liberalization of cement policy in Nigeria sponsored by Senator Ashiru Oyelola and co-sponsored by Senator Bima Enagi, Senator Oriolowo, Adelere, Senator Samuel Egwu, Senator Gaya Kabiru and Senator Nnachi Michael.
In the motion, the lawmakers noted that cement is considered of strategic importance to the development of infrastructures such as roads, bridges, drainages as well as in the construction of residential and public buildings.
The Senate argued that “cement is one of the few building materials in which Nigeria is self-sufficient. As of 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 20.7 MMT. Yet, the prices of cement in Nigeria (N380) is about 240 per cent higher than the global average.”
It further said it was “cognizant that cement takes a large share of domestic expenditure, and the price of such commodity significantly impacts the government’s ability to provide much-needed infrastructural works required for the growth of our economy.”
The senate noted that the recent increase in the price of cement from N2,600 – 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.
The upper parliament noted that it was “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.”
The senate said it was “convinced that if the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally, noting that it was also “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.”
According to the red chamber of the national assembly said it “strongly believes 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 3 per cent per annum; a housing deficit of 30 million units and less engagement of over 10.5 million workforces of the building and construction industry.”
The Senate said it believes that the unfavourable government policies such as the imposition of multiple taxes, erratic power supply, a government ban on importation in violation of ECOWAS Trade liberalization Scheme (ETLS), and subsequent lifting of importation in favour of few producers have negative implications on the growth of infrastructures.