Why the price of Nigeria’s Dangote cement is high

The management of Dangote Cement Plc says the increase in the price of cement is due to the Value Added Tax which was included on April 12.

Currently, the price of a bag of cement from its factories and plants in Obajana and Gboko is N2,450 and N2,510 at Ibese.

The latest development was disclosed by Mr. Devakumar Edwin, the company’s Group Executive Director in charge of Strategy, Portfolio Development, and Capital Projects in a statement in Lokoja on Tuesday, April 13, 2021.

He said that these were the prices of cement which included the Value Added Tax (VAT) as of April 12.

According to him, the clarifications become necessary in view of the recent insinuations that the company sells cement in Nigeria at higher prices relative to how much it sells it in other countries, particularly in Ghana and in Zambia.

“While a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes,” Edwin explained.

He said that though, the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the open market.

Edwin frowned at what he called “intentional misinformation ” that Dangote was selling its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

“This allegation is false, misleading, and unfounded,” he said.

He attributed the high cost of cement in Nigeria to the global rise in demand for cement as a result 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 activity.

“To ensure that we meet local demands, we had to suspend exports from our recently inaugurated export terminals, thereby foregoing dollar earnings,” he said.

He said that the company had also reactivated its 4.5million ton capacity Gboko Plant which was closed down four years ago and the company is running it at a higher cost.

“This is all in a bid to guarantee that we meet demands 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 percent of our costs are linked to the USD, so the costs of critical components such as gas, gypsum, bags, and spare parts; have increased significantly due to the devaluation of the Naira and VAT increase.

“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly,” he said.

He said that the company had only adjusted its transport rates to account for higher costs of diesel, spare parts, tyres, and trucks’ replacement. …