Why Our Cement Costs Less in Zambia Than Nigeria – Dangote Cement Plc

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Why Our Cement Costs Less in Zambia Than Nigeria – Dangote Cement Plc
Obiajulu Joel Nwolu

Following the uproar generated by the recent reports that Dangote Cement Plc sells cement at a higher price than it sells to other countries, Zambia notably, its management has clarified that a bag of cement from its factories and plants across Nigeria (as of 12th April 2021) is N2,450 in Obajana and Gboko and N2,510 in Ibese, VAT inclusive.

Reports recently surfaced that Dangote cement sells for 110 Kwacha in Zambia which is equivalent to about N1,800 in naira, while Nigerian consumers buy the same product for at least N3,500.

Reacting, the Dangote Cement Group has said it cannot control the prices of its products when it gets to the market.

Devakumar Edwin, the group’s Executive Director, Strategy, Portfolio Development and Capital Projects, disclosed that while a bag of Cement trades 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.

He said though the company has direct control over its ex-factory prices, it cannot control cement’s ultimate price when it gets to the market. He advised that it is essential to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market, DailyNigerian reports.

He, therefore, frowned on misinformation that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

The Executive Director while describing the claims as false and misleading, gave the media persons present at the press conference copies of invoices from Nigeria and some other African countries (Cameroun, Ghana, Sierra Leone, Zambia) and urging them to conduct independent investigations on the price of cement across the West African coast.

He said, “Demand for cement has risen globally as a fallout of the COVID 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 demand, we decided to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings. We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed four years ago, and run it at a higher cost, all in a bid to guarantee that we 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% of our expenses are linked to USD, 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 this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly. We have only adjusted our transport rates to account for higher diesel costs, spare parts, tyres, and truck replacement.

“Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far.”

This post was written by Obiajulu Joel Nwolu.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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