Finance

Reason for cement hike price – Dangote

Dangote Cement Plc may have stepped up its expansion programme in response to the recent developments in the cement market in Nigeria. The development may have also forced the dominant player in the market to consider halting its export programme.

Speaking to the media yesterday on the public outcry over the rising prices of cement in Nigeria, the Group Chief Commercial Officer, Dangote Industries Limited, Rabiu Umar, who made these disclosures attributed the development to market forces saying that demand has recently outstripped supply.

Listing the measures Dangote has taken in response to the situation Umar stated: “We have invested in a new line that has been completed in our Obajana plant. That line is waiting for the power plant for us to start to bring out the cement .

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“We have a new line now in our plant at Opela in Edo state, that is also going to start operation soon. For the last couple of years, one of our plants in Gboko, former Benue cement, has not worked for almost four years. We have now started that plant, all in a bid to make sure that there is enough production.” Responding to the allegation that cement producers are complicit in the retail price increases, Umar stated: “As we all know with every other items, what drives the price is actually demand and supply.

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Now, as a business, Dangote has not increased price up till this point. Therefore, what has  happened is that the forces of demand and supply have been the main driver of what people are talking about, the prices of cement going to  extra amounts of money. “The only way to deal with that is to make sure that you have  adequate supply capacity because if you do not produce enough no matter what you do, there will be break in the supply chain and that will always create some opportunity for arbitraging. “What we are trying to do is to make sure that we increase the supply of the product in the market.”

In addition to the supply side measures Umar also disclosed that the company is intervening in the transportation and distribution logistics to starve off possible cost sleeping into the pricing issue. Consequently, he said Dangote is injecting 2000 units of new trucks with some of them ordered from local truck manufacturers, the Anambra Motor Manufacturing Company, ANAMCO, in Enugu. “We are buying these trucks and putting them all there to make sure that the distribution is also taken care of”, he added.

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