Abdul Samad Rabiu, Chairman of BUA Cement, has revealed that his company’s plan to sell cement at N3,500 per bag in 2023 was thwarted by the actions of cement dealers.
Rabiu explained that BUA Cement sold over a million tons of cement to dealers at this price, with the intention that the lower cost would be passed on to end-users.
Speaking in Abuja, Rabiu noted that dealers were instead selling each bag of cement to consumers at prices ranging from N7,000 to N8,000. He indicated that the company had to abandon the policy because it was not designed to financially support dealers.
Rabiu further stated that BUA Cement was unable to regulate the dealers, who were benefiting from significant profit margins due to the high resale prices.
He said: “So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them.”
He added: “Some were selling at N7,000 and N8,000 per bag. They made a lot of money with a very high margin. I think we had sold more than a million tons at N3,500 before we realized what the dealers were doing.”
Rabiu also cited the devaluation of the Naira and the removal of fuel subsidies last year as additional challenges. He explained, “We wanted that price to stay at that level but dealers refused.
“So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.”
He concluded by referencing the foreign exchange rate fluctuations, stating: “I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar.
“So, it became even more challenging and more difficult for us to actually sustain that price policy.”
