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Why We Summoned Cement Manufacturers - FG
Posted by Thandiubani on Tue 20th Feb, 2024 - tori.ngUzoka-Anite expressed the concern of the government about what could be responsible for the hike in the price of cement.
The federal government has explained why it summoned a meeting with cement manufacturers.
It said the reason is because of the surging price of cement nationwide.
The meeting was held on Monday.
The government’s apprehension stems from its efforts to enhance the cement sub-sector, aimed at reducing reliance on imported cement and achieving self-sufficiency, possibly leading to becoming a net exporter, which now appear to be jeopardized.
The Minister of Works, David Umahi and the Minister of Industry Trade and Investment, Doris Uzoka-Anite separately invited the main manufacturers, Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc to a meeting to discuss the issues involved with a view of finding an enduring solution to the surging prices.
The two meetings were collapsed into one that was held at the Works Minister’s office where the position and concerns of the government were laid bare before the manufacturers.
The three manufacturers as well as the Chairman of the Cement Manufacturing Association were strongly represented at the meeting which took three hours of extensive deliberation.
Umahi, in his opening remarks expressed shock at the turn of event after being assured by the manufacturers that his alternative to road construction will be hugely supported by price-friendly cement availability.
The Industry, Trade and Investment Minister, on the other hand was perturbed that the Backward Integration Program (BIP), to which the cement sub-sector was a beneficiary seems to be of little effect despite government’s huge investment in the scheme.
Umahi said: “The essence of this meeting is the concern of the public and also the fact that this Ministry since the month of August, 2023 has been preaching on how we can utilize our local context in the construction of our roads.
“It’s been a National discourse and a subject that stirred a lot of controversy. At a time we thought we were winning.
We now have this jump and I think some of the people that fought us will be laughing at us.
“You said the concrete route is going to be cheaper than asphalt and you said because there are a lot of factors that make the increase in asphalt cost to be geometric and that of concrete to be arithmetic.
“But now it’s the other way around.
“So, we have called for this meeting to find out why and from security report, the X factory price, though increased to a point of concern, still has a very wide margin to that of the market prices.
“So, we like to find out what are the X factory prices before this sudden increase and what are the market prices as at now and whether you have control of the market prices.
“And also, to find out, what can we do, today (Monday) and going forward”.
Uzoka-Anite expressed the concern of the government about what could be responsible for the seeming lack of BIP effect on the prevailing cement price situation despite huge commitment to the scheme by the government.
While calling for honest intervention in reducing the price of cement and secure the future of Nigeria, she said: “Just like the Honorable Minister said, we are very concerned about the surging prices in everything, including cement. And for us, the Ministry of Industry, Trade and Investment regulates the development of cement.
“You were one of the Backward Integration Programme (BIP) pilot schemes that was initiated by the Ministry and we think that the cement sector is actually a success story of the BIP.
“But to our own also shock, we saw that despite the cement, most of the components being sourced are produced locally, we are seeing your prices going up and even surging.
“It’s not going up small small, it’s actually leaping and sometimes even doubling.
“And it was also important for us to call you back to the table to understand from different points of view.
“One, why this surging? Given the fact that the whole idea of having cement and giving the BIP the push in cement production was to ensure that we could manage prices and manage the development of the sector.
“And then secondly, from the consumer protection standpoint to also understand also the price imputes into your pricing mechanism.
“And basically, also look at the competition issues, whether we have an issue of collusion because you guys are just the three producers.
“And usually when you have an oligopoly you have competition issues and you have collusion amongst the participants and all of those issues are of keen interest to the Ministry.
“In addition to the concern that the Minister of Works has his input or his key input to the sector and to the vision that he has for the construction industry.
“So, it’s a very important area and a very important sector for us. Cement, as you know, is the backbone for anything construction, that is infrastructure development, which we have a deficit in and which we really, really need to support development and bridge the infrastructure gap or to affordable housing to just name it.
“It’s so critical that we can’t afford to close our eyes and not intervene in the sector.
“The purpose of government meeting is when we understand what your challenges are. If there are bottlenecks that we can remove to support them, we would.
“And if there are conversations that we need to have that we are not even privy to, that is peculiar to your industry that has come up since BIP took off those conversations, we can have them now and with a view to resolving all the issues and ensuring that we maintain steady pricing, bring down the price if we can, because we don’t want to be forced to come and start doing your price metrics to understand the cost of your input and all of that.
“We have a common understanding of what we need to do as joint stakeholders and partners in the development of this country and then forge one common front forward as participants and as well as stakeholders in the industrialization and development of the country.
“So basically, this is also the reason why we are participating in the meeting.
“We can even reinforce and strengthen our voice as government and then listen to the same, it’s the same common problem, it’s the same common solutions that we also come up with here.”
Among other resolutions, the manufacturers agreed to peg the price of a 50kg bag of cement at between N70,000 and N80,000 depending on the location nationwide.
A price control mechanism was also agreed to be put in place by the manufacturers to prevent unilateral manipulation of the new price regime.
It was also decided that the price would undergo further downward review once the government fulfills its commitment to resolving the challenges encountered by the manufacturers.
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