Dangote reveals the actual cement price for suppliers
To clarify the report making the rounds on the hike in cement prices in Nigeria compared to other countries, the management of Dangote Cement Plc has revealed that the price of a bag of cement from its factories and plants across Nigeria is N2,450 in Obajana and Gboko, and N2,510 in Ibese inclusive of VAT.
Recall that there was a recent insinuation that the company sells cement in Nigeria at significantly higher prices relative to other countries, particularly Ghana and Zambia.
According to Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin he revealed that, while a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.
He said that though the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the market. He advised that it is important to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market.
He, therefore, frowned at intentional misinformation or demarketing, allegedly sponsored by some individuals, that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.
He described the allegation as false, misleading, and unfounded, while giving the media persons present at the press conference copies of invoices from Nigeria and some other African countries (Cameroun, Ghana, Sierra Leone, Zambia), and urging them to conduct independent investigations on the price of cement across the West African coast.
Edwin further explained that while Dangote cement has 60% share of the market, other companies have the remaining 40%. DCP has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.
He further explained that “Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity. To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.
We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”
He said: “Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like gas, gypsum, bags, and spare parts; has increased significantly due to the devaluation of the Naira and VAT increase.
Despite this, DCP has not increased ex-factory prices since December 2019 date while prices of most other building materials have gone up significantly. We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” he said.