James Emejo in Abuja
The Chairman of BUA Cement Plc, Abdul Samad Rabiu, has stated that despite the significant energy challenges faced by the manufacturing sector, the current price of cement in Nigeria remains the most affordable when compared to other African countries.
During the company’s recently held 2023 Annual General Meeting (AGM) in Abuja, Rabiu revealed that shareholders have approved a dividend payment of N67 billion for the financial year, amounting to N2 per share.
According to Rabiu, the high energy consumption in the cement industry poses a major challenge, resulting in substantial costs.
He expressed disappointment in the actions of dealers, who purchased the product from the BUA factory at a lower price but sold it to end consumers at significantly higher prices.
As an example, the company sold over a million tons of cement to dealers at N3,500 per bag, but these intermediaries were selling it to consumers for prices ranging between N7,000 and N8,000 per bag.
Rabiu also highlighted that the devaluation of the Naira and the removal of the petrol subsidy made it unsustainable for the company to continue its efforts to reduce the price of cement.
He stated, “A lot of the dealers took advantage of those policies. Instead of passing the low prices to the customers, they were selling at even double the price we sold to them. Some were selling at N7,000 and N8,000 per bag, making a lot of money with very high margins. We had sold more than a million tons at N3,500 before we realized what the dealers were doing.”
Due to the challenges faced by Nigeria, such as the devaluation of the Naira and the removal of fuel subsidies, BUA Cement could not sustain its lower price policy. Rabiu explained, “We wanted that price to stay at that level, but the dealers refused. We could not sustain it simply because we did not want to subsidize the dealers. The foreign exchange rate moved from about N600 to maybe N1,800 to the US dollar, making it even more challenging for us to maintain that price policy.”
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