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Decreased production, monopoly due to rising cement prices

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Decreased production, monopoly due to rising cement prices

Stakeholders in the construction industry attributed the high cost of cement in Nigeria to supply and demand forces caused by the monopoly and low production levels of the major producers of the product.

An investigation by the Nigerian News Agency (NAN) in the southwestern states of Nigeria – Ogun, Oyo, Osun, Ondo, Ekiti and Kwara – showed that the cost of a bag of cement ranges from 3,500 N to 4000 N depending on the brand and the region.

The high cost of cement was also found to have had an impact on the construction industry, with some people with construction projects temporarily suspending work for now or reducing the level of work.

Speaking to NAN on the matter, Ms Funmilola Adeboje, a cement distributor in Ibadan, said the cement companies have reduced the number of distributors to just a few who get the merchandise straight from the source.

She said that the few selected distributors, now called large distributors, have monopolized the market and hence the rise in the price of the commodity.

“Only a few distributors have access to cement directly from producers and due to the shortage of supply, the strength of demand has also pushed up the price.

“In the past, I had booked directly with the company, but I was told that I could no longer book to get the cement, that I would have to come and buy it when the cement was available.

“We don’t know how well companies distribute products to major distributors, but we buy at varying prices; N3,500 to N3,600.

“We only earn N100 on each bag and sometimes you can get as low as N20 on each bag and it wasn’t like that before now,” she says.

A sales representative from one of the major cement companies, who spoke on condition of anonymity, said the problems affecting cement sales in Nigeria are numerous.

He explained that the production plants of two large cement producers have not been operating at full capacity since mid-2020, “and companies have just patched things up.

“Factories, once repaired, can run at full capacity for a while, and then they’ll break down again.

“Due to the shortage of supply, market force has taken over to dictate the price due to the high demand on supply and some other factors such as limited access granted to distributors.

“The few people selected also have to tip certain people to get the product due to the shortage of production and this increases the overall cost of selling cement in Nigeria.

“Lafarge has its own problems and also Dangote with optimal production. Thus, the large distributors are maximizing the situation to their advantage.

“Cement factories would care less about price as long as their products are sold. The government may need to regulate the issue to rid it of corruption, ”he said.

The source said that a bag of cement is sold in the Bodija market between 3700 N and 3800 N, but at the distributor it ranges from 3400 N to 3500 N.

According to him, companies are mostly discreet or not direct with the actual price of the commodity, but a bag has been sold between N2,500 and N2800 in the past.

“A distributor who received maybe 20 trucks of cement in the past, but due to the situation on the ground, now gets two to five trucks and therefore wants to take advantage of 20 trucks with a few trucks,” he said. he declares.

Mr. Rotimi Omoniyi, a building contractor, said the increase could be due to foreign exchange or production inputs, which affected the sale price.

“I don’t think there is anything we are doing in Nigeria that has no currency link and that increases the cost of production.

“The masses are the recipients of the high cost of producing goods in Nigeria,” he said.

Osun cement sellers attributed the rise in product prices to the scarcity and activities of middlemen.

They said that due to the unavailability of the product since 2020, the prices have fluctuated.

In Osun, Mr. Ibrahim Awolola, a cement distributor in Osogbo, said that the increase in the price of cement in the market was due to its unavailability due to a sharp drop in production.

Awolola further explained that cement manufacturers also complained about the unavailability of raw materials for production, which in turn affected its availability.

He said the situation was simply in accordance with the law of supply and demand, “the rarer and more unavailable a commodity, the more expensive it will become.”

Awolola also said the cost of logistics and transportation increases the price of cement in the market.

The cement distributor said that a bag of Dangote cement sells for between N 3600 and N 3700, depending on the location.

He assured, however, that whenever there were improvements in cement production and supply exceeded demand, the price would certainly drop.

On a related note, another Osogbo cement retailer, Mr. Adewale Adeyemo, said the scarcity of cement was the main factor pushing the price up.

Adeyemo said information also made available to him revealed that the transport companies that provide trucks for cement supply have withdrawn their services, while the few who work are the ones who dictate the price of transport. .

In Akure, Mr. Godswill Chima, an owner in Oba-Ile, urged the government to allow other investors to go into cement production rather than leaving the product in the hands of Dangote and BUA.

“There is too much monopoly on cement production. The government should encourage other local producers by licensing them with low tariffs, as a high tariff rate also discourages those who are willing to invest in cement production.

“In March, I bought a bag of cement at the rate of N3, 500 now it’s N4,000, which is a shame for the majority of people who build houses, especially civil servants.

“If left unchecked, many landlords will increase the rent on their homes because they have no choice but to raise it,” he said.

Ms Labake Lijoka, a cement trader in Okitipupa, said she was surprised at the increase in the price of cement to N3,600 from her old N2,500.

She called on the federal government to intervene in this matter by imposing itself on the producers of the product “because the high cost has affected businesses and customers no longer frequent them”.

Also speaking to NAN in Ilorin, Hajia Ayo Bello, a cement merchant, revealed that a bag of cement was selling as high as 4000 to 4500 N a few months ago.

She said, however, that a 50kg bag of Dangote cement now sells for N 3700 or more depending on the region.

The cement dealer said Elephant cement sells for N 3700 per 50 kg bag, Ashaka cement sells at N 3750 and Bua cement sells at N 37003,750 depending on the area.

Bello also attributed the high cost of transportation and some government policies as also being responsible for the increase in the price of cement in Ilorin and across Nigeria. (NOPE)

(NAN)

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