The building and construction projects in the country are often confronted with some challenges, which include rising cost of materials, rising prices of gas, logistics and other cost of distribution, increasing cost of servicing cement plants equipment, electricity and other operational issues.
The price of cement currently stands at about N4,000, rising above the affordability of the ordinary Nigerians.
However, the price is expected to crash as logistics bottlenecks are going to be removed after the completion of Kano-Katsina- Jibir- Maradi rail, according to Lai Mohammed, minister for information, culture and tourism, said.
The minister who was on a media tour of BUA Cement Sokoto plant last week said the Kano-Katsina- Jibir- Maradi rail is going to have a branch in Sokoto, which means that by the time that section of the rail is completed then it will be cheaper to transport cement from Sokoto to all parts of the North and all part of Nigeria by rail.
He was being guided through the four plants of the company by Yusuf Binji, managing director/CEO, BUA.
“It will also help in bringing down the cost of energy because then you can use rail to bring bulk Liquefied Natural Gas (LNG) into the plant. So we are very confident that in a few years time, after the logistics challenges have been overcome in terms of transportation, we can look forward to a crash in the cost of cement,” Mohammed said.
Speaking further, he said, “it is about demand and supply; the demand for cement is so high and until we are able to ramp up supply we will not be able to have a reasonable price. For instance, if 100 people need cement, and we can provide only for 50, there is a gap in between and the sellers will hoard and sell at their own price.”
“I think this is what the managing director said that as of today the price of cement out there is more than 30 percent higher than what they take it from the factory. And until we have surplus supply we will not be able to bring down the price.
“This is the reason we must commend BUA and other companies for their expansion project,” he added.
Mohammed’s visit to BUA Cement Sokoto plant was a continuation of his tour of public and private sector projects across the country, visiting projects that are impacting positively on the lives of people.
“Within the past two months alone, we have visited four projects, the latest being this BUA Cement facility here in Sokoto.
Others are the Dangote Petroleum Refinery and Petrochemicals as well as the Dangote
Fertilizer in Lagos, which we visited on April 3, 2022; the Lekki Deep Sea Port in Lagos, which we visited on May 4th 2022 and the Duchess Hospital also in Lagos, which we visited on May 10th 2022,” he noted.
All these projects are beneficiaries of the conducive business environment created by the Administration of President Muhammadu Buhari, under the auspices of the Presidential Enabling Business Environment Council (PEBEC), which has implemented over 150 reforms since 2016, as well as the Companies and Allied Matters Act, 2020 (CAMA 2020) – Nigeria’s most significant business legislation in three decades.
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According to him the result of this favourable business environment is the birth of new businesses such as the 5 Million tonnes per annum (mtpa) BUA Cement here in Sokoto; the $2.5 billion Dangote Fertilizer Plant that will produce 3 million tonnes of Urea every year; the 650,000 barrels per day oil refinery due to open later this year; the Lekki Deep Sea Port, one of the most modern sea ports in West Africa and the 5,000 barrels per day Modular Refinery in Ibigwe, Imo State.
“It is interesting to note that the conditions that have made BUA cement to flourish, especially since 2015 when this administration assumed office, include the fact that BUA was granted Pioneer Status, the ban on importation of cement, government’s divestment from the cement industry and of course backward integration policy. Thanks to these conditions.
He said BUA Cement has recorded a 300 per cent increase in production between 2015 and now. That is from 3.5 million Tonnes per annum in 2015 to 11 million tonnes per annum now. For its part, the sokoto plant is operating at over 90 per cent of installed capacity. Because of its location, which is just 100 kilometers to Niger Republic, the plant exports to Niger and Burkina Faso, earning Nigeria much needed forex.
The minister noted that only excess is exported, especially during the rainy season. Other facts include that the company produces all year round, loading between 250 and 270 trailers per day. The plant has 700 trucks for cement distribution.
“The 3 million tonnes per annum line (IV) of the BUA Cement facility that we have just visited was commissioned by President
Muhammadu Buhari in January this year, and took the combined installed capacity of the factory’s Lines 2,3 and 4 to 5 Million tonnes per annum. This is one of the most modern cement plants anywhere. It has gas analyzers used in regulating carbon emissions released into the atmosphere; air purifying mechanisms set up to enhance the quality of air released from the cement manufacturing process. In fact, the plant has filters capable of capturing 99.9 percent of dust in order to make the environment healthy and conducive for the workers and customers alike. The plant is the first cement plant in Nigeria to use Liquefied Natural Gas to generate 50MW of power, thereby replacing coal in its kiln. This has made the plant environmentally friendly to also curb climate change. I am sure when the AKK gas pipeline project is completed, it will drastically reduce the time and cost of transporting gas, which is currently being trucked from Port Harcourt to the plant. At least 20 trucks of LNG are brought here daily from Port Harcourt. Imagine the costs and the logistic challenges involved in this.”
In his presentation before the minister’s media tour, Yusuf Binji, managing director/CEO, BUA said the Sokoto Cement plant comprising four lines has created 10,000 direct and indirect jobs.
He noted that the 17 million tons targeted capacity project has been self-funded without any fund accessed from the Central Bank’s intervention facilities.
“Now we are bringing NLG from Port Harcourt about 20 trucks a day and energy estimates about 80 percent of our production cost and definitely anything that is going to reduce energy that is going to reduce the current cost
“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 like you mentioned is about N4000.
This is about 25 to 30 percent higher than factory price and we are selling far below that.
“Cement is cheap in Nigeria and we have factors of demand and supply that controls and influence the price and definitely Nigeria still has a very low per capita consumption of cement compared to Ghana.
“In Nigeria now, the per capita consumption is about 123 kilograms per person which is less than two and half bags, Where Ghana is about five bags per person; so there consumption is very high.
“That is where we want to be as a country and this means there is still under production of cement in Nigeria because right now last year the consumption and demand was about 30 million tonnes and we should be like 60 to 70 million tonnes even countries like Senegal, ivory coast, Egypt, they are all far above Nigeria in terms of per capital consumption.
“On technology transfer, these are something we are pursuing actively. But the level of technology we have deployed in this factory will need some time for indigenous Nigerians to be able to man as part of the EPC agreement we have in training.
“This is something that is on-going and we have already taken over and definitely within one to two years we should be able to fully have these transfers to Nigerians,” the managing director said.
ZEBULON AGOMUO,
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