By Emma Amaize, Regional Editor, South-South
IT was a food for thought for the Minister of Commerce and Industry, Senator Martins Jubril-Kuye in Abuja, recently, when a group of new and small players in the Nigeria cement industry asked him to find out from the big-time cement manufacturers the reason why they were flooding the market with imported cement when it is far cheaper to supply locally manufactured cement to Nigerians.

David

In the words of the chairman of the Forum of New Entrants to Cement Industry of Nigeria, Mr. David Iweta who a delegation of members on a courtesy visit to the minister,

“The Honourable Minister should pose a fundamental question to the very big manufacturers of cement in Nigeria:  It is a clear fact that it is far cheaper to supply locally manufactured cement to the Nigeria market than imported cement owing to freight cost of about $45 per metric tonne, import duty of 5 per cent, Nigeria Maritime Authority (NMA), port dues, midstream discharge cost, stevedoring cost and cost of fund, which is in the region of N550 per bag.”

“Why are they not concentrating on local production and,  thereby , supply bulk cement for their local plants for bagging at their various terminals by saving Nigerians additional cost of N550 per bag of cement in line with boasted plans to flood the Nigeria market by 2010 with locally manufactured cement,” he probed further.

And he sarcastically added, “ Honourable Minister Sir, could this be a sign of patriotism, sincerity and  good governance to allow importation of bulk cement by those that have unrestricted access to venture capital funds and manufacturing cement for over 45 years to still be allowed importation of bulk cement instead of encouraging new and small players?

Nigeria cement industry
held hostage
Iweta told the minister, “The world annual demand for cement is estimated about 7 billion metric tonnes with China alone supplying about 3 billion metric tonnes while her domestic demand is in the region of 1.5 billion metric tones with population of 1.5 billion people, China per capital on cement is 1 metric tonne”. “Iran , which is a member of the D-8 Countries and also OPEC member, recorded 45 million metric tonnes of cement in 2009, exclusive of clinker production of over 30 million metric tonnes with population estimate of about 66 million people.   Iran per capital on cement clinker combined is in the region of 1.1 metric tonnes.

“Nigeria, a member of the D-8 and OPEC recorded cement production in 2009 of below 5 million metric tonnes with population of about 150 million people, with per capital of cement of 0.033 metric tonne”, According to him, “The reason responsible for this pitiable negative trend is as a result of the near monopoly situations that have characterized the Nigeria cement industry over the years.

We are using this window to request the Honourable Minister to carry this message to Mr. President before we secure appointment with the Presidency on the ugly situation in the Nigeria cement industry.

It may interest the Honourable Minister to note that about 65 per cent of this country’s annual import of cement is by a single company. The said company alone has placed order for 32 shipments for June to December 2010″.

Way forward- To resuscitate the cement industry, the forum requested, “The cement industry management that was moved from the Ministry of Commerce and Industry to Ministry of Finance should return to status quo.” “The Federal Government should invite all stakeholders in the cement industry together with ministry’s officials for a brain storming meeting to draw up a balanced cement policy for the country, which will accommodate all interest groups in the industry (mini and large cement manufacturers) as the case in India ,” It said.

They stated, “The terminal year of 2013 for bulk cement import and setting up a cement plant for new entrants is not feasible and should be re-considered and extended to 2020 to enable the new entrants enjoy same benefits as old players.

,  which afforded them profit, track records, confidence in the industry, attraction to finance institutions and support our efforts in developing  large scale cement factory,  considering the huge capital outlay of local cement production (ranging $300 million to $800 million) for plants of 1 – 3 million metric tonnes production capacity per year.”

Like the practice in other countries such as Iran,  the forum said Nigeria should set up a Cement Development Fund with 7 per cent interest rate, 4 (four) years moratorium, with repayment period of 15 – 20 years,  taking advantage of the funding opportunity available with Export Credit Agencies of exporting countries of cement Plants and MachineriesIt added,

“The Federal Government should encourage more entrants into the industry by vacating from her cement policy all forms of monopoly so as to attract direct foreign investment into the Country and afford local players secure joint venture partners to develop their projects in line with cement backward integration policy of Government”.

According to the group, “There is urgent need for vibrant cement research institution and cement development plan.  Owing to the huge capital requirement for cement limestone production, there is need for long- term policy with gestation period of 10 (ten) years.

This will encourage small -scale cement factory owners using modern researched technologies like in India where other forms of raw materials, other than limestone is used for cement production – Cement factories in India is over 140 plants”.

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