Cement dealers frustrated our N3,500/ bag policy – BUA

AbdulSamad Rabiu, chairman BUA Cement has revealed that cement dealers truncated his company’s effort to reduce the cost of cement to ₦3,500 per bag last year, Topnaija.ng reports.

Speaking at the 8th Annual General Meeting of the company in Abuja, Rabiu expressed his frustration over the inability to control the final market price of cement despite the company’s initiative.

Rabiu revealed that despite BUA Cement selling over a million tons of cement to dealers at N3,500 per bag, with the intention of passing the benefits to end-users, the dealers instead sold cement to consumers at prices as high as N7,000 and N8,000 per bag. The company was forced to discontinue the policy, as it was not intended to subsidize dealers who made substantial profits from the high margins.

The Chairman attributed the unsustainability of the policy to several factors, including the Naira devaluation and the removal of fuel subsidies last year. He stated, “We were selling cement at N3,500 with the expectation that the dealers and the retailers would pass the benefits of the low price to the end-user customers. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them.”

Rabiu emphasized that BUA Cement has continued to work towards preventing cement prices from escalating at the same rate as the Naira devaluation. He noted that despite the exchange rate increase, cement prices have only risen by 50%, from N4,000 per bag at the beginning of last year to the current price of N6,000.

The Chairman also highlighted the impact of energy costs on cement production, stating that gas, which is priced in dollars, is the biggest cost factor. He revealed that one of BUA’s plants incurs a monthly invoice of around N15-16 billion for gas, a significant increase from the previous N3-4 billion.

Despite the challenges faced, BUA Cement reported a strong revenue growth of 27.4% to N460 billion in the financial year under review. However, the company experienced increasing price pressures due to the Naira devaluation and growing inflation, resulting in a 39.5% increase in production costs to N276 billion.