The federal government has threatened the possibility of opening the borders to cement importation should Nigerian cement manufacturers refuse to play ball on price reduction of cement in the country.
By implication, the federal government is sensing that the ‘gentleman’ agreement, which was anchored on improvement in some of the decayed infrastructure may not be implemented considering the urgency ocassioned by the restive public.
In the reckoning of the government, some of the demands such as some raw materials could be sourced locally and fo not have anything to do with the foreign exchange.
Consequently, it said that although it is aware of the macroeconomic challenges facing the country some of the key components of producing building materials, especially cement, are locally sourced, and considers the recurring disproportionate increase in the price of cement as unacceptable and unreasonable.
Minister of Housing and Urban Development, Arc Ahmed Dangiwa, who made the declaration said key input materials for cement production such as limestone, clay, silica sand, and gypsum sourced within our borders, should not be dollar-rated.
According to the Nation online, Dangiwa made this known on Tuesday, February 20, in Abuja at an emergency meeting held with cement and building materials manufacturers.
He said the price of gas that manufacturers are using as an excuse should not be because gas is a raw material found within the country and the excuse of an increase in mining equipment should not come up because equipment bought by these manufacturers has been used for decades and not just purchased every day.
The minister said the border was closed to the importation of cement to help local manufacturers but if the government decides to open it back for mass importation, prices of cement would crash and local manufacturers would be gravely affected.
The minister in response to the manufacturers said: “The challenges you speak of, many countries are facing the same challenges and some even worse than that but as patriotic citizens, we have to rally around whenever there is a crisis to change the situation.
“The gas price you spoke of, we know that we produce gas in the country the only thing you can say is that maybe it is not enough. Even if you say about 50 percent of your production cost is spent on gas prices, we still produce gas in Nigeria it’s just that some of the manufacturers take advantage of the situation. As for the mining equipment that you mentioned, you buy equipment and it takes years and you are still using it.
“The time you bought it maybe it was at a lower price but because now the dollar is high you are using it as an excuse. Honestly, we have to sit down and look at this critically. The demand and supply should be good for you because the government stopped the importation of cement, they stopped the importation in order to empower you to produce more.
“Otherwise if the government opens the border for mass importation of cement, the price would crash but you would have no business to do and at the same time the employment generation would go down. So these are the kinds of things you have to look at, the efforts of government in ensuring things go well.”
Earlier in his speech, Group Chief Commercial Officer, of Dangote Cement, Rabiu Umar blamed the high cost of gas and mining equipment for the hike in cement price.
He said: “It is safe to say we are all Nigerians and we are all facing the current head weight that is happening. I would like to speak on the popular belief that most of the raw materials to produce cement are available locally. While we have limestone and in some cases, we have gypsum and some cases coal, the reality is that it takes a lot of forex-related items to produce cement.
“Most of the cement plants in Nigeria use gas to produce, the gas is indexed to a dollar and it is almost half of the total cost of production. So if 50 percent of your cost of production is indexed to the dollar it means if the dollar changes then your total expenditure would change in that direction.
“For us to mine the limestone, one needs to import the mining equipment and the equipment is a substantial part of the cost of production, you have to invest in a lot of those equipment and invest in keeping them going. On the issue of the gas, we also have the issue of the quantity of gas, we are not getting enough gas to produce enough to put into the market then we talk about the price and quality of the gas because they are all related.
