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Cement manufacturers blame price hike on LPFO

Cement Manufacturers Association of Nigeria has said that the current high cost of cement was due to an increase in the cost of Low Pour Fuel Oil (LPFO).

Mr James Salako, secretary of the association, told newsmen in Lagos that the price of the oil had increased from N40 to N68 per litre. He said that the distributors of cement took advantage of this to increase the price, knowing full well that manufacturers would not cope with the price differential for a long period.

Besides, he said that one of the major manufacturers had stopped production for turn-around maintenance of its plant, adding that this resulted in a decrease in supply. “These are the reasons for the hike,” he said According to Salako, distributors are now hoarding the product in anticipation of a formal increase in price by the manufacturers.

He said that the manufacturers had not increased the factory price in spite of the increase in the price of the oil. Salako appealed to the Federal Government to intervene in the matter by forcing down the price of the oil, better known as black oil.

According to him, cement is a key product in construction and its price has constantly faced manipulation by distributors, in spite of a presidential directive that the product be sold for N1,500 per 50kg bag.

“Distributors are Nigerians and they should show the spirit of patriotism by not manipulating the price to maximise profits. Local manufacturers of cement have enough capacity to meet local demand. This year, we expect all the new facilities currently under construction to come on stream.

All things being equal, we expect that by 2012 local manufacturers will produce a total of 28 million tonnes per annum. We do not expect anything less than 60 per cent performance from most of the new plants in 2012.

“If the Federal Government continues with the strict implementation of the backward integration policy, our expectation is that new entrants will come into the business.’’ He added that the present tempo of growth in the industry would be sustained to bring down the price of cement, adding that the objective of the association was not to be self-sufficient in cement production, but to become a major exporter of the product.

“The Federal Government has given 2013 for the achievement of the self-sufficiency in cement production but the target is attainable before 2013. The country is abundantly endowed with the raw materials. Limestone, the major input, is found across all the six geopolitical zones of the country. Red alluvium and shale are available in large quantity, except gypsum, which is not in commercial quantity,” he said.

He listed the challenges faced by the sector to include illegal miners, power and other input which prices fluctuate. The price of a bag of cements now sells for between N2,400 and N2,800 from N1,700 depending on the location. But in some states such as Edo, Ondo, Ekiti and Abuja, a bag of cement goes for for N1, 800. The current national demand for cement is estimated at about 13.5 million tonnes whereas the national production level is 11.5 tonnes since 2009.


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