The Chairman and CEO of BUA Cement Plc, Abdul Samad Rabiu, has revealed that owing to logistics, the price of cement in the Nigerian market is about 20% higher than the price resellers purchase cement from manufacturers (the ex-factory price).
According to a transcript report by ThisDay, he made this revelation while delivering his keynote address at the 2020 Institute of Directors Dinner, to commemorate his admission as a fellow of the Institute of Directors (Nigeria).
He explained that the unimpressive state of the transport infrastructure in the country has aggravated logistics rigidity in the country, which has caused bottlenecks in the supply value chain.
The bottlenecks in the supply value chain coupled with reduced production amongst some players according to him are responsible for the increase in the market price of cement relative to the manufacturers’ price to resellers.
According to him, the price of cement in the Nigerian market is currently about 20% higher than the price of cement ex-factory, owing to logistics rigidities driven by poor transport infrastructure and heightened demand in the market.
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While speaking about the competitive advantage of BUA Cement Plc in the cement industry, Rabiu explained that the plants in the industry are ageing. However, he stated that BUA is one of the few with new plants, and the company is keen to increase installed plant capacity to tangibly bridge the demand gap by 2022.
What you should know
- In line with the projection of Rabiu at the event, Nigeria has the capacity to produce at least 300kg per head or about 60million metric tonnes per annum – which is double our current production capacity.
- In a bid to position for this opportunity, he revealed that a 3rd cement line of 3mmt per annum in Sokoto is expected to be commissioned in the middle of 2021.
- However, the company is also set to commence the construction of 3 additional cement plants of 3 million tonnes each in Sokoto, Edo and Adamawa at the cost of $1.050billion.
- These plants with a cumulative installed capacity of 9 million metric tonnes per annum, when completed by 2022 will position BUA Cement as the second-largest cement producer in the country.
- He also revealed plans to combine the respective units under the Group’s foods business segments, this according to him would facilitate the listing of BUA FOODS on the Nigerian Stock Exchange by the end of 2021.