Tuesday, June 7, 2011

Nigerians groan under high cost of cement

Promise by cement manufacturers that 2011 will witnessed price reduction in the product has turned out a paradox as the cement prices assumed a flight in recent months, thus giving stakeholders in construction and building business cause to worry Ayodele Samuel examines the scenario in this analysis. Relieve in a form of drastic reduction in the price of cement enjoyed by consumers in the recent past could be short-lived after all, as prices have assumed upswing direction of late. From hitherto N2, 000 plus, price of cement crashed to N1, 400 and every stakeholder applauded the positive development as a boost to housing delivery and construction sector. As if the price reduction had not gotten to the desired level, cement stakeholders last year promised further price cut down by 20% in 2011. This was the position of Cement Manufacturers Association of Nigeria CMAN as announced by its Chairman, Joseph Makoju. Indigenous manufacturers raised hope of crash in cement prices in the country with a projection that output will soon hit about 30 million metric tons per annum. Nigeria is said to require about 15.5 million metric tons to meet its current national demand of per annum, local manufacturers supply hover at about 11.5 million metric tons, while importation close up the number. However, projections of output rise are hinged on the success of the various expansion projects being undertaken by the manufacturers as some of the projects are scheduled to boast market output by 2011 and early 2012. Suffice at this point to take a cursory look at Nigeria cement firms. It consists of four major producers, namely Lafarge WAPCO, Dangote Cement industries, Cement Company of Northern Nigeria and Ashaka Cement. Both Lafarge and Ashaka Cement have a combine 40 per cent share of the market while Dangote Group a majority stakeholder in Obajana and Benue Cement has an estimated 55 percent share of the Nigerian cement market. Engineer Makoju, Special Assistant to the president of Dangote Cement, Alhaji Aliko Dangote said that the group‘s Obajana Cement Plant is currently being expanded to add five million metric tonnes per annum to its initial five million metric tonnes production capacity. The group is also speeding up the construction of its Greenfield cement plant at Ibese, Ogun State, which will yield another five million metric tonnes. Another of its subsidiary, Benue Cement Company Plc, is currently producing about five million metric tonnes per annum. Dangote Cement, a member of the Dangote Group came into the cement manufacturing with a bang, building the biggest cement plant in West Africa at Obajana, Kogi State, which currently has two production lines producing 5 million metric tons of cement per annum. The third production line is nearing completion to add another 5.5 million metric tons on completion. Already, its Gboko plant, currently producing 3 million metric tons is also undergoing upgrading to add another 1 million metric tons to bring it to 4 million metric tons per annum. Besides, Dangote group is prosecuting a $680 million third plant at its Ibeshe Cement plant in Ogun State which when completed kicks off production by June. The plant is adding 6 million metric tons per annum. With this, Dangote cement alone would be churning out 20 million metric tons per annum from its three plants whose distribution cycle covers the whole country. Firm such as Larfarge WAPCO is also doing something positive to increase cement out by adding another plant to its existing plants at Ewekoro and Sagamu both in Ogun State. Indeed, while projections and expansions currently being undertaken by various cement firms supposedly should lead to a crash in cement prices, its price has hit the roof top. Investigation has revealed that the rise in the cost of cement is slowing down the pace of work in the building industry with building contractors, private builders including real estate developers lamenting the increase. Accommodations seekers, findings reveal are finding it difficult to cope with high price tags on the available houses. House and property owners are complaining high cost of maintaining their buildings. Olaharin Akinwunmi , a building contractor told Peoples Daily the high cost of cement has affected profitability in the sector. “The cost of executing building project skyrocket daily, the unstable prices of cement in the market worsen our plight, I’m building on a site now which we have to stop to study situation.” he lamented . Also collaborating Akinwunmi’s plight, Tunji Olamafe a private estate developer in Ogun state vowed to make his profits from his customers who are in need of his building. “Life has not been easy with us, in fact me particularly. Since January cement price has made life difficult for me in the business. The price is not stable, you wake up and discover what you bought last night has jumped twice of its previous price. It’s that bad. I call my supplier every hour to ascertain the cost of cement and am always disappointed to hear increase”, he said adding that, the cost to build 10 houses, now seems not be able to develop more than five at the end of the day due to the rising cost of cement and blocks.” Managing Director of Amorit International Limited Mr. Kayode Oyewole, a developer said the increase in the price of cement has impacted projects negatively. “By the time you consider the high cost of cement, there is no way one would not add to the cost of the houses.” He blamed cement producers for the high price, pointing out that some of them are not circulating the product the way they should. He also enjoined manufacturers to make the product available continuously to solve the problem of scarcity. “There is need for cement manufacturers to always publish their manifest and make it open to members of the public to know the quantity of cement going to one location or the other”, he said. Still, some cement consumers blamed cement producers for the high price, pointing out that some of them are not circulating the product the way they should. Experts have also pointed that the incessant building collapse is not divorced from high cost of cement as individuals and developers might want to cut corners by reducing the quantity of cement required for their construction. But, CMAN chairman attributed the increase in the cost of the commodity to the high cost of haulage. Makoju noted that the high cost of procuring diesel for the heavy duty vehicles that transport cement from the factory to the various depots spread across the country was a major factor in the costing of the commodity. http://www.peoplesdaily-online.com/business/economy/9996-nigerians-groan-under-high-cost-of-cement

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