In a move that will raise the stakes in the rapidly evolving Nigerian cement market, leading cement manufacturer, Dangote Cement Plc, has announcedhuge cuts in the price of the essential product.
In a step that will make cement cheaper than it has ever been since 2005, the new price regime announced by the Group Managing Director of Dangote Cement, Mr. Devakumar Edwin, said the company has pegged the Dangote 32.5 cement grade at N1,000 per 50kg bag, while the higher 42.5 grade is to sell for N1,150 per bag.
The new prices exclusive of the Value Added Tax (VAT) represents about 40 per cent discount on the prevailing market price of the product which is currently sold for N1,700 irrespective of the grade, across the country.
Edwin said the move is in line with the company’s commitment to the nation’s dire need for the development of infrastructure and to boost the federal and state governments’ ongoing effort to reduce the near 20 million housing deficit in Africa’s largest economy.
“We recognise the need for a dramatic increase in the response to the huge infrastructure and housing deficit in the country, and one of the ways of addressing the issue is bringing the price of building materials down to much more affordable levels especially cement which is within our own control. This is part of our own contribution to the transformation agenda of the Goodluck Jonathan administration and the attainment of key milestones in the Millennium Development Goals (MDGs),” he said.
Since the commencement of the implementation of the backward integration policy for cement in the country over 12 years ago, the local production capacity of the product rose from less than 2 million metric tonnes per annum to about 38 million metric tonnes per annum currently.
During the over 12-year period of the backward integration policy, over $20 billion has been directly and indirectly injected into the Nigerian cement industry with Dangote Cement Plc accounting for 60 per cent of that spend.
The GMD/CEO also noted that Dangote Cement Plc would continue to ensure alignment of its corporate social responsibility with its strategic business initiatives and also would continue to evaluate its pricing regime in Nigeria’s best interest.
Meanwhile, the timing of the initiative has confounded industry watchers, who say that from experience, the cement market is entering the high demand phase as the raining season is tapering and the dry season which provides the opportunity for increased construction and building activities is setting in.
Recently, in further compliance with the ongoing Standards Organisation of Nigeria (SON) directive and regulation on the various grades of cement and their prescribed uses, Dangote Cement launched its brand of the premium 32.5 cement grade which has been restricted to plastering use only.
The largest cement producer in Nigeria noted that the move was to develop a full bouquet of cement types to meet the varying needs of consumers for the different grades of cement.
Dangote with this move now produces 42.5 grade for column casting, block making, decking and other general purpose construction works that require high strength, while also producing the 32.5 grade for rendering or plastering.
The company produces on demand the 52.5 grade for specialized construction of high strength structures such as bridges, flyovers and sky scrappers, among others.
The 32.5 grade of cement, which has the lowest strength among the cement grades, was priced lower than the others, selling for N150 lower than the price of the higher strength 42.5, a price cut that is part of the announced price regime.
Dangote said in compliance with the SON standard for cement quality and packaging, the lower 32.5 type on the Dangote shelf would be clearly labelled as such, in order to minimise the incidence of building collapse in the nation’s building and construction industry arising from the misapplication of different grades of cement.
Alhaji Rasidi Adebowale, the National President of the Block Moulders Association of Nigeria, said he received the news with much happiness especially what the price reduction holds for his members in Nigeria. He expressed the hope that the new price review would translate to reduction in the price of blocks.
In his own comment, Alhaji Okunola Abegunde, the Lagos State Chairman of the Block Moulders, said he had all along been looking forward to a time like this when the price of cement would crash and allow the low income group to become house owners.
Chairman of Coalition Against Building Collapse, Kola Ojewuyi, said the downward review of prices has confounded the critics of Dangote Cement who had earlier condemned the campaign embarked upon by company on the adoption of 42.5 grade as a ploy to increase the price of the commodity.
President of the Nigerian Institute of Architects Mr. Bruno Niyi, hailed the decision by Dangote Cement Plc on the price reduction and urged the management of the company to sustain the new price regime and ensure it is not hijacked by profiteers.