Dangote Cement says Nigeria price in line with other African countries

Dangote Cement Plc, Africa’s leading cement manufacturer, has clarified that the price of a bag of cement from its factories and plants across Nigeria is in consonance with or even lower than prices in other Africa countries.

The clarification is coming on the heels of recent insinuations that the company sells cement in Nigeria at significantly higher prices relative to other countries, particularly Ghana and Zambia.

According to Dangote Cement, the price of a bag of cement in Nigeria, inclusive of Value Added Tax (VAT), ranges from N2,450 being sold at Obajana and Gboko factory to N2,510 in Ibese factory.

While a bag of cement sells for an equivalent of $5.1, including VAT, in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes, Devakumar Edwin, Dangote Group’s executive director, strategy, portfolio development & capital projects, told journalists in Lagos on Monday.

He said it was important to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market, adding that though the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the market.

He frowned at intentional misinformation, allegedly sponsored by some individuals, who claimed Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

He described the allegation as false and misleading while also urging the media to conduct independent investigations and compare the price of cement from Nigeria and other African countries (Cameroun, Ghana, Sierra Leone, Zambia).

Edwin further explained that while Dangote Cement has 60 percent share of the market, other companies have the remaining 40 percent.

“Dangote Cement has no control over either the prices charged by other cement manufacturers or the prices charged by retailers in the markets,” Edwin said.

“Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity,” he said.

The executive director noted the company had to suspend exports from its recently commissioned export terminals, thereby foregoing dollar earnings, in order to meet local demand.

“We also had to reactivate our 4.5m-ton capacity Gboko Plant which was closed four 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,” Edwin explained.

“Over the past 15 months, our production costs have gone up significantly. About 50 percent 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,” he said.

Africa’s largest cement producer, Dangote Cement Plc, has remained a major contributor to the economy with a tax charge of N97 billion for the financial year ended 31st December 2020, even as it proposed a dividend of N16 per share.

According to the cement group’s audited results released on the floor of the Nigerian Stock Exchange (NSE), the tax charge represents an increase of 95 percent over the sum of N50 billion recorded in 2019.

Edwin explained that Dangote Cement 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-N350 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,” he said.