AbdulSamad Rabiu, Chairman of BUA Cement, revealed at the 8th Annual General Meeting in Abuja that cement dealers thwarted his company’s attempt to sell cement at N3,500 per bag last year.
Rabiu explained that although BUA Cement supplied over a million tons of cement to dealers at this lower price, the dealers sold it to consumers at prices ranging from N7,000 to N8,000 per bag. The disparity meant that the intended benefits of lower prices did not reach the end-users.
“We had to abandon the policy because our goal was not to subsidize dealers,” Rabiu said. “Dealers exploited the situation by selling at double the price we offered them.”
He attributed the policy’s failure to a combination of factors, including the Naira devaluation and the removal of the fuel subsidy. These economic changes rendered the price policy unsustainable.
Rabiu elaborated, “At one point, the exchange rate surged from around N600 to N1,800 to the US Dollar, which made it increasingly difficult to maintain our pricing strategy. We did not want to be in a position where we were subsidizing dealers.”
Despite the challenges, Rabiu noted that BUA Cement has continued to work towards stabilizing prices. “If you compare the exchange rate and cement prices from last year to now, cement is cheaper today than it would have been if we had allowed the price to follow the exchange rate directly. From N4,000 at the beginning of last year to N6,000 today, the increase is only about 50%.”
He added that the company’s efforts have helped prevent even higher price increases. However, he pointed out that costs related to energy, predominantly dollar-denominated, have significantly impacted expenses. “One of our plants’ monthly invoices has risen from N3-4 billion to about N15-16 billion,” Rabiu disclosed.
The company’s financial report highlights a 27.4% increase in revenue, reaching N460 billion, up from N361 billion in 2022, attributed to a growing market share. However, due to the devaluation of the Naira and rising inflation, BUA Cement faced escalating production costs, which surged by 39.5% to N276 billion from N197.9 billion the previous year.
