The management of Dangote Cement Plc has explained why the prices of its product are higher in Nigeria than in other African countries.
The Group Executive Director, in charge of Strategy, Portfolio Development and Capital Projects, Mr Devakumar Edwin, said the high cost of cement in Nigeria is due to the high exchange rate of the dollar to the naira, adding that the COVID-19 pandemic also contributed to the high cost.
According to Edwin, the price of its cement per bag from the factory is between N2,450 in Obajana and Gboko, and N2,510 in Ibese, with the Value Added Tax included.
He also noted that the company has no control over the ex-factory prices as it could only control the factory price.
A viral publication had suggested that the Dangote Cement Group sells its product to Zambia at 110 Kwacha (approximately N1,800) while the company sells the same product to Nigeria at N3,500.
However, the Dangote Cement Group has dismissed the publication as untrue and unfounded.
The New Diplomat’s checks revealed that in Lagos State, the prices of Cement range from N3,000 to N4,000, as at the time of filing this report.
According to Edwin, 50% of the production materials are linked to dollars, which account for the high cost of cement in Nigeria.
According to Tuesday’s official exchange rate, $1 is equivalent to N380.
The statement reads, “To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.
‘’We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”
“Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the naira and VAT increase. ‘Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.
‘’We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.
‘’We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far.”