The Chairman of BUA Cement, Alh. Abdul Samad Rabiu, yesterday recounted how cement dealers frustrated his company’s N3, 500/bag policy, last year.
He spoke at the 8th Annual General Meeting of the company in Abuja.
He said that while his company sold over a million tones of cement to dealers at N3, 500, per bag, with the intention that they would pass the benefits to end-users, the dealers sold a bag of cement to consumers at as high as N7000 and N8,000.
A ton is equal to 20 bags of 50 kg weight.
He said the company had to discontinue the policy as its intervention was not to subsidise dealers.
According to him, BUA Cement could not stop the dealers whom he said made huge profits from the high margin because the company had no control over prices in the open market.
He added that the Naira devaluation last year and the fuel subsidy removal also played roles in making the policy unsustainable.
Alh Rabiu said, “We were selling cement at N3,500 with the expectation that the dealers and the retailers would pass the benefits of the low price to the end-user customers.
“It’s such that whatever price you sell cement at, you pay. It doesn’t matter what happens if the price doubles or triples if it’s less than that. So, we didn’t actually have that price.
“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.
“Some were selling at N7, 000 and 8 000 per bag. They made a lot of money from.the very high margin. I think we had sold more than a million tons, yes at N3,500 before we realised what the dealers were doing.”
“And then, because of the issues that Nigeria faced at the time about devaluation of the.Naira last year and the removal of fuel subsidy, we could not continue that policy.
“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. We are subsidizing the dealers.
“So, I’m referring to the point where the FX rates, the exchange rates, from when we decided to sell it at N3,500, the rate was about N600 to maybe N1,800, N1,900 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price.”
