Abdul Samad Rabiu, Chairman of BUA Cement, has revealed that his company’s efforts to reduce cement prices from N4,500 to N3,500 per bag were undermined by dealers and economic conditions.
Speaking at BUA Cement’s 8th Annual General Meeting in Abuja on Thursday, Rabiu explained that the planned price cut, announced on September 16, 2023, was aimed at supporting the federal government’s initiative to alleviate economic hardship. Despite selling over a million tons of cement to dealers at the reduced price, consumers did not benefit as intended.
Rabiu noted that dealers exploited the situation by reselling the cement at inflated prices, ranging from N7,000 to N8,000 per bag, far exceeding the reduced cost. This price discrepancy was beyond BUA Cement’s control as dealers set their own rates independently.
“The dealers, instead of passing the lower prices to customers, were selling at even double the price we sold to them,” Rabiu said. “Some were selling at N7,000 and N8,000 per bag. They made a lot of money with a very high margin. We had sold more than a million tons at N3,500 before we realized what the dealers were doing.”
Additionally, Rabiu cited external economic factors, such as the devaluation of the naira and the removal of fuel subsidies, as further complicating the sustainability of the price reduction. The naira’s exchange rate plummeted from about N600 to nearly N1,800 to the US dollar, escalating costs and rendering the lower price untenable.
“We wanted to maintain the lower price, but dealers refused, and it became challenging due to the devaluation of the naira,” Rabiu explained. “When the exchange rate shifted, sustaining the reduced price became increasingly difficult.”
Despite these challenges, Rabiu emphasized that BUA Cement has continued to subsidize prices to mitigate the impact of the naira’s devaluation. He pointed out that, relative to exchange rate fluctuations, cement prices have been kept relatively stable.
“If you compare the exchange rate then and now, cement is cheaper today than it was last year,” Rabiu noted. “Although the price has increased from N4,000 to N6,000 per bag, this is only a 50 percent increase.”
Rabiu also highlighted the impact of dollar-denominated costs, particularly for energy, on cement pricing. Energy costs, which are a significant expense for BUA Cement, are priced in dollars, affecting overall pricing.
“We are committed to finding solutions to stabilize cement prices and mitigate the impact of external economic factors on consumers,” Rabiu added.
Leave a Reply