Cement Producers Hike Price
- By Simeon Ogoegbulem
- Published April 11th, 2011
- News
- Unrated
Nigerians will now be made to pay more for cement as cement producers in Nigeria at the weekend increased price of the essential commodity. BusinessWorld Intelligence can disclose that the price increase which is from N870,000 per tonne to N900,000 per tonne ex-depot price is the second price increase this year. A tonne is a trailer load of 600bags. At the start of the new year in January, cement price went up from N850,000 per tone to N870,000 per tone. Following this recent increase, cement marketers quickly reacted by adjusting the retail price of the product from N1,800 in some cities to N2,200.
Market survey by BusinessWorld Intelligence indicates that the product sells for as high as N2,400 in Abuja and its environs. This increase comes on the heal of appeals by both the federal government and Nigerians for a reduction in price. The federal government convened a stakeholders meeting in Abuja where issues bordering on the ever rising price of cement was discussed. With the recent increase, it appears government’s effort did not yield any dividend. Adducing reasons for the increase, a cement producer who craved anonymity attributed it to four factors. One was the cost of infrastructure. The second was the cost of LPFO used in powering the machines. The third was the wide gap between supply and demand. And the last but most important according to him was the exorbitant duty on cement.
According to our source, the 2010 import duty on cement was increased from five per cent to 20 per cent with additional 15 per cent levy, making a total of 35 per cent. The 35 per cent tax comprises the reinstatement of 20 per cent import duty on bulk cement and a new 15 percent levy for the building of Cement Technology Institute in Lokoja, Kogi State.
On the average, cement producers pay about N340 per bag as tax to the government. This represents about 22 per cent of the selling price of cement per bag. For importers, excise duty is N286 per bag of cement. To clear a vessel of 44,000 MT therefore, costs about N320 million. Of this amount, the sum of N120 million (15 per cent) goes to the cement institute. Hence, for the 2.5million MT import license granted between June and December 2010, government pocketed a total of N18.182 billion as tax. Tariff amounts to N11.4 billion while N6.818 billion is for the Cement Institute alone. The sum of $200,000 (about N30 million) and $96,000 (about N14.4 million) are paid to Nigerian Ports Authority (NPA) and Nimasa respectively.
“In a country that is still developing, where cement is in high demand and per capita income is one of the lowest in the world because of non availability, policies such as these would stifle rather than encourage economic growth,” he said. “For cement price to come down, government has to review this tax burden.”
Based on revised government’s projections, Nigeria is expected to achieve self-sufficiency in cement production and become an exporter of the commodity by 2013 when local production is expected to reach 22 million metric tones.
Market survey by BusinessWorld Intelligence indicates that the product sells for as high as N2,400 in Abuja and its environs. This increase comes on the heal of appeals by both the federal government and Nigerians for a reduction in price. The federal government convened a stakeholders meeting in Abuja where issues bordering on the ever rising price of cement was discussed. With the recent increase, it appears government’s effort did not yield any dividend. Adducing reasons for the increase, a cement producer who craved anonymity attributed it to four factors. One was the cost of infrastructure. The second was the cost of LPFO used in powering the machines. The third was the wide gap between supply and demand. And the last but most important according to him was the exorbitant duty on cement.
According to our source, the 2010 import duty on cement was increased from five per cent to 20 per cent with additional 15 per cent levy, making a total of 35 per cent. The 35 per cent tax comprises the reinstatement of 20 per cent import duty on bulk cement and a new 15 percent levy for the building of Cement Technology Institute in Lokoja, Kogi State.
On the average, cement producers pay about N340 per bag as tax to the government. This represents about 22 per cent of the selling price of cement per bag. For importers, excise duty is N286 per bag of cement. To clear a vessel of 44,000 MT therefore, costs about N320 million. Of this amount, the sum of N120 million (15 per cent) goes to the cement institute. Hence, for the 2.5million MT import license granted between June and December 2010, government pocketed a total of N18.182 billion as tax. Tariff amounts to N11.4 billion while N6.818 billion is for the Cement Institute alone. The sum of $200,000 (about N30 million) and $96,000 (about N14.4 million) are paid to Nigerian Ports Authority (NPA) and Nimasa respectively.
“In a country that is still developing, where cement is in high demand and per capita income is one of the lowest in the world because of non availability, policies such as these would stifle rather than encourage economic growth,” he said. “For cement price to come down, government has to review this tax burden.”
Based on revised government’s projections, Nigeria is expected to achieve self-sufficiency in cement production and become an exporter of the commodity by 2013 when local production is expected to reach 22 million metric tones.
