BUA blames middlemen for high cement price

• As FG lauds 17m ton capacity

Nigeria’s second biggest cement Manufacturer, BUA cement has disclosed that the activities of middlemen is responsible for the current high cost of cement in the country. 

The Managing Director and Chief Executive Officer, BUA Cement Plc, Yusuf Binji, made the disclosure during a factory tour of the BUA cement production plant by the Minister of Information and Communication, Lai Mohammed in Sokoto.

Binji said: “Most of the middle men in the cement industry sell their product to about 25 to 30 per cent far above factory price across the country, which is largely because of underproduction of the product in Nigeria.” 

He said, driving down the energy cost of the plant is another key factor the government needs to intervene as 20 trucks of Liquefied Natural Gas (LNG) from Port-Harcourt feed the factory daily to run at 90% production capacity.

He said: “Energy takes about 80% of our production cost and definitely anything that is going to reduce energy is going to reduce the current cost in the open market.

“This will have a direct impact on the cost of cement in the country. The price of cement currently being sold in the open market is about N4,000; this is about 25 to 30% higher than factory price and we are selling far below that,” he explained.

The official also noted that Nigeria still has a very low per capital consumption of cement compared to some countries. “In Nigeria now, the per-capita consumption is about 123 kilogramme per person which is less than two and a half bags,” noting that consumption in 2021 was 30 million tons, with targets of 60m to 70m annually as Senegal, Ivory Coast and Egypt are above Nigeria in per-capita consumption.

The Minister, on his part, commended the management of BUA for the investment that has added over 17 million metric tons to its production capacity.

He said: “When you invest about a million dollars in one line it takes about four to five years of gestation period before you can even start producing and another 10 years for you to break even.”

In the last five years, BUA has completed four cement plants of 3m tons annually and is set to complete two more plants.

Mohammed said: “The need to boost average individual’s low per-capita consumption of cement has been identified as a critical factor to cushion the demand and supply forces and the racketeering margin made by middle men affecting price of product.

“In view of this, the federal government is urging potential investors to take advantage of various window of opportunities like tax holidays to participate in the diversification initiatives aimed at growing more businesses,” noted Mohammed.