Senate Blocks Motion To Reduce Prices of Cement In Nigeria

The Upper Chamber of the National Assembly on Tuesday blocked a motion seeking liberalization of the cement industry to bring down price of the product.

Specifically, the Senate struck out recommendations that would’ve brought down the prices of cement to the barest minimum.

The action of the Senate was sequel to the debate on a motion titled, “Need for Liberalization of Cement policy in Nigeria,” sponsored by Senator Ashiru Oyelola Yisa (Kwara South) and five others.

The recommendations struck out by the Senate were; “Urge the Senate to advice the Federal Government to liberalize her current policies on cement production, particularly license restriction, to attract more investors in order to make cements more available to Nigerians at a moderate price.

“Urge the Federal Government to set up a Committee to investigate anti-competitive practices by local cement producers; direct the cement industries in Nigeria to increase their production and reduce the price of 50 Kg of cement to barest minimum considering the fact that the materials for its production are mainly sourced locally.”

The resolution, which eventually scaled through was the “Call on the Federal Government of Nigeria to provide more industrial incentives and industrial protections such as offering concessionary loans and larger tax incentives for new entrants in order to boost production of cements, reduce price and encourage more valuable producers in Nigeria.”

Findings by our correspondent revealed that China produces the most cement globally by a large margin, at an estimated 2.2 billion metric tons in 2020, followed by India at 340 million metric tons in the same year. China currently produces over half of the world’s cement. Global cement production is expected to increase from 3.27 billion metric tons in 2010 to 4.83 billion metric tons in 2030.

The recommendations rejected by the Senate, according to findings, would have helped the nation to move higher in cement production and by extension job creation.

In his contribution, Senator Ibrahim Gobiri (Sokoto) said that liberalizing the policy will collapse the industry.

He said that they must protect their enterprise and industries, adding, “If you want to establish an industry go ahead and establish it.”

On his part, Senator Sadiq Sulaiman (Gombe Central), noted that with the increase in unemployment, cement industry is a critical commodity to provide jobs, stressing, “Senate must pay attention to the prayers.”

Leading debate on the motion, Senator Yisa noted that cement is one of the few building materials in which Nigeria is self-sufficient, adding that as at 2018, the installed capacity of cement producers was about 47.8MMT which is far above the estimated (2018) consumption of about 20.7MMT. “Yet, the prices of cement in Nigeria (N380) is about 240% higher than global average.”

The lawmaker pointed out that Cement takes a large share of domestic expenditure, and the price of such commodity significantly impacts the government’s ability to provide much-needed infrastructural works required for the growth of our economy.

He said: “The recent increase in price of Cement (from N2,600 – N3,800) slowed down the amount of construction work being embarked upon thus negatively affecting labour engagement and almost collapsed the procurement plan of the governments in 2020 Appropriation Act;

“The Nigerian cement market is oligopolistic in nature with three players (Dangote Cement (60.6%); Lafarge Africa Plc (21.8%) and BUA Group (17.6%) largely dominating the scene therefore making it susceptible to price fixing practices.

“If the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally.

“The significant rise in cement prices in the country and the low purchasing power of Nigerians may result in substandard building constructions and non-completion of planned infrastructural works.

“There is an urgent need to encourage more local production of cement to satisfy the demands of Nigeria with a steady growth rate of approximately 3% per annum; a housing deficit of 30 million units and less engagement of over 10.5 million workforce of the building and construction industry.

“Unfavourable government policies such as imposition of multiple taxes, erratic power supply, government ban on importation in violation of ECOWAS Trade liberalization Scheme (ETLS) and subsequent lifting of importation in favour of few producers have negative implications on the growth of our infrastructures.”