• Thursday, March 28, 2024
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BusinessDay

Why cement price increased – distributor

The political economy of cement

Obioma Okorie, a major distributor of cement and other building materials in Umuahia has identified removal of rebate/incentive by cement manufacturers in the country as one of the major causes of the sudden rise in cement price from N2,500 to N5,000 between November and December last year.

Okorie, who is the Chief Executive Officer of Obioma Enterprises Limited and Jefeco Construction Company Limited, is the major distributor of Dangote, BUA, and Unicem Lafarge cements in Abia.

He also attributed the sudden price rise to insufficient supplies of the product by manufacturers which were far less than the demand during the period in question.

“When many people are chasing few goods, definitely prices of the commodities will rise. We discovered that the demand for cement went up, whereas the manufacturers were not supplying enough of the product to meet with the increasing demand,” said Okorie.

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He explained further that some of the manufacturers had embarked on turn around maintenance (TAM) of their machinery/ equipment which led to them stopping production of their products.

He said the situation on ground during the period caused an increase in the price of a 50kg bag of cement to sell for N5,000, thereby affecting the sales output. He said his company and builders and their engineers suspended their projects, waiting for when the price would come down.

The chief executive of Obioma Enterprises said the price hike lasted between November ending and December 2020.

“When others were selling N5,000 per bag, we were selling between N2,600 and N2,700 as distributors. The price hike might not have been unconnected with when some of the cement manufacturers had the problem of raw materials or breakdown of equipment. During that period, my company’s sales output was seriously affected, because there were not enough products to supply buyers; and many people stopped buying and suspended their building projects, pending when the price would come down,” he said.

A market survey carried out by Businessday in Umuahia revealed that presently Obioma Enterprises Limited sells a bag of 50 kg cement for N2,600, while retailers sell for N3,000.

Meanwhile, Okorie has appealed to the Federal Government to give some incentives/ reliefs to businessmen to cushion the effects of the first wave of Covid-19.

On his part, Chikaodi Sunday Obike, the CEO of Stevchika Nigeria Limited, said, the rise in cement prices had affected his building company, as many of his clients had stopped their building projects. This, he said, has made them be redundant for some time now.