Despite high expectations from consumers following the announcement of a price reduction in the unit price of BUA Cement, the price change is yet to reflect across major markets as the product is still being sold at the old price.
It would be recalled that the management of BUA Cement had recently announced a reduction in the ex-factory price to N3,500 per 50kg per bag, effective October 2, 2023.
A week after the announcement, the new price is yet to reflect as some retailers and cement distributors revealed that the price has remained unchanged.
A cement dealer at Canal View Estate in Isolo Lagos, Alhaji Abiodun Haruna, said that “he was not aware of the new price regime.”
He said that though he was still selling old stock, the possibility of downward price review was not possible.
He asked, “has the cost of production reduced? Has public energy source (PHCN) improved? Has the cost of fuel come down? What of the cost of transportation? It will be impossible for the price to just come down like that.”
Haruna further disclosed that “they (dealers) were witnessing low patronage because of the harsh economy.”
The managing director of Ajomobi & Co Enterprise, Eniola Ajomobi stated that though the company has announced the reduction in the factory price but we are yet to receive stocks with the new price.
He noted that as of today, BUA Cement is still selling at old price, saying that if cement price can be reduced, it will be a positive development, and this is what we are all hoping for as this will impact on the economy and building industry.
Also, the managing director of Dominion Goshen Company in Lokoja, Asiwaju Dominion said that it is a good development if the price of cement can come down but for now the price of cement at either BUA, Dangote or Lafarge are still the same.
He added that “BUA representatives have not informed us about the reduction in its product price, we also heard from the media. Many of us have old stock on the ground. We are not aware of the price reduction as we expect the company itself to inform us first and this is causing a lot of confusion.”
Proshare in a report titled ‘Nigeria’s 2023 Cement Battles: Understanding the Place of Price, Power, and Privilege in BUA’s Price Cut’ said that “if BUA Cements recently announced price reduction is anything to go by, then questions need to be raised concerning the possibility of reducing the prices of other consumer goods such as wheat/grain flour and sugar. However, with respect to wheat and sugar, the economics of the business appear widely different. While raw materials for cement production are almost exclusively local, the import cost components for sugar and wheat are high and variable.
“The volatility of Nigeria’s foreign exchange market, the rise in domestic energy costs, the geopolitical challenges between Ukraine and Russia and the problems with crop production and supply chain disruptions in Brazil create different circumstances from cement.”
It added that “analysts have requested greater clarity on how BUA Cement could reduce the prices of its products in an environment of hyperinflation. For example, did savings come from below-the-line revised expense items or elsewhere?”
The report stated, “while BUA Cement should be commended for its price reduction initiative, market investigations suggest that three days after its announcement of a price reduction to an ex-depot price of N3,500 per 50kg bag of cement, several wholesalers still advertise the old prices, this may be related to an inventory crawl, where wholesalers sell off old stock bought at higher ex-depot prices.
“But of equal importance is that in recent times, BUA Cements prices have been higher than competitors, and the reduction in price may simply reflect a correction for recently resolved inefficiency discovered in the old price arrangement.”