During the 8th Annual General Meeting held in Abuja yesterday, AbdulSamad Rabiu, Chairman of BUA Cement, expressed frustration over the company's failed attempt to reduce cement prices for end-users last year. According to Rabiu, BUA Cement had intended to sell cement at N3,500 per bag to alleviate financial pressure on consumers. However, the plan was thwarted by cement dealers who exploited the price difference for significant profits.
Rabiu revealed that the company sold over a million tons of cement to dealers at the proposed N3,500 per bag. However, rather than passing on the savings to consumers, dealers were selling cement at inflated prices, ranging from N7,000 to N8,000 per bag. This substantial markup undermined BUA Cement's efforts to stabilize the market and provide relief to consumers amid challenging economic conditions.
He stated, "So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them. Some were selling at N7,000 and N8,000 per bag. They made a lot of money with the very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing."
Rabiu further explained that the company's decision to discontinue the pricing policy was driven by a lack of control over dealer pricing in the open market. BUA Cement could not regulate the dealers' activities or prevent them from profiting excessively. "We wanted that price to stay at that level, but dealers refused," he continued. "We could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers."
The Chairman also pointed out that Nigeria's economic challenges, including the devaluation of the Naira and the removal of the fuel subsidy last year, further complicated efforts to maintain the lower price. “I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy,” Rabiu added.
Despite these setbacks, BUA Cement remains committed to exploring ways to support Nigerian consumers while navigating the complexities of the cement market and broader economic conditions.
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