Dangote Cement retains prices two months after despite inflation

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By Tersoo Adagher

Two months after campaigns of calumny alerting Nigerians to a phantom increment in prices of Dangote Cement PLC, the company has maintained the prices of the product.

In April, a Nigerian-based cement company allegedly “dissociated itself” from a planned hike of cement by Dangote Cement PLC, stating that it would not be part of a “cartel” to increase cement price.

Since then, the claim has proven false, as Dangote Cement has maintained its prices, despite increasing costs and inflation in the country and the harsh effects of COVID-19.

Dangote Cement PLC had said in April, through its Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin that the prices for the company’s cement at its plant at Obajana and Gboko remained N2,450, while its Ibese plant would continue to offer the product  for N2,510, inclusive of value-added tax (VAT).

Edwin responded to insinuations that Dangote Cement was selling its product at a higher price in Nigeria than in other African countries where its cement also enjoys a high market.

He said that while a bag of cement sold for an equivalent of $5.1, inclusive of VAT in Nigeria, it sold for $5.95 in Zambia ex-factory and $7.2 in Ghana, inclusive of taxes.

According to him, retailers have the power to fix prices on their own, while the company had direct control over its ex-factory prices.

Edwin boasted that Dangote Cement PLC had invested much in the building material, adding that it controlled 60 per cent of its market share.

“DCP (Dangote Cement PLC) has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.

“The demand for cement has risen globally as a fallout of the COVID-19 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 activities.

“To ensure that we meet local demand, we had to suspend exports from our recently commissioned terminals, thereby forgoing dollar earnings. We also had to reactivate our 4.5 million tonne capacity Gboko plant, which was shut four years ago, and run it at a higher cost all in a bid to meet demand and keep the price of cement within control in the country.

“Over the past 15 months, our production costs have gone up significantly. About 50 per cent of them are linked to the U.S. dollar. So, the cost of critical components like gas, gypsum, bags, and spare parts has increased significantly due to the devaluation of the naira and VAT increase.”

Despite the challenges, Dangote Cement had not increased its ex-factory prices since December 2019, while prices of most other building materials had gone up significantly, he said.

He explained that the company did adjust its transport rates to account for higher diesel, spare parts, tyres, truck replacement, and not its cement’s actual price.

“Still, we charge our customers only N300 to N350 per bag for delivery within a 1,200-kilometre radius. We have been responsible enough not to cash in on the recent rise in demand to increase prices,” he said.