Cement manufacturers and recently-licensed importers are in disagreement over the ban by the Federal Government of the importation of bagged cement and the granting of wide ranging concessions to manufacturers, about a year after licences were issued some companies to import cement to bridge domestic production shortfalls.
Some of the new measures include the subsidised pricing of low pour fuel oil; de-linking the price of gas for cement production from the price of LPFO; duty-free importation of LPFO and lifting of restrictions on importation of gypsum – key inputs in cement production.
The licences have since been revoked and government has ordered the stoppage of clearance of bagged cement at the nation‘s ports, citing as reasons, abuses of import licences and failure to achieve price reductions envisaged by massive importation policy.
Dangote Cement in a statement issued in Lagos on Thursday, said it welcomed the move on the grounds that it would help unlock the nation‘s potential as a major cement manufacturer in view of huge limestone deposits.
But, some licensees under the aegis of Cement Stakeholders Forum of Nigeria or New Entrants said in another statement, also on Thursday, that the policy reversal was ill-timed, as the country was yet to achieve self-sufficiency in cement production.
Some of the cement importers also claimed that they were sure to lose huge sums of money already committed to cement production, bagging and freight contracts with European and Asian firms.
Dangote, however, said the measure would encourage local manufacturers and justify its huge investments in cement plants including Obajana and Benue Cement Company that had doubled production capacity in the last six years while protecting the new industries from ”dumping.”
Dangote said it was currently investing in plant expansions and new projects for additional 12 million metric tonnes, and that another company was adding a further two million metric tonnes to meet the current consumption demand of 14 million metric tonnes in local production, by 2011.
It added, ”We expect that as local production increases with the attendant increase in supply, market forces will act to impact positively on the ex-factory price of cement, as witnessed in the telecoms industry.”
However, the CSFN, in a statement signed by its President, Chief David Iweta, and Secretary, Chief Reagan Ufomba, insisted that the ban of the importation of bagged cement did not affect licences issued before the ban in line with industry practice.
”It is an established norm in advanced democracies and under the rule of law that laws and policies are not implemented retroactively. We regret this ill-timed policy when the country is yet to attain self-sufficiency in cement production or grapple with the energy requirement of the country as a means of ensuring optimal production,” the statement said.
The group said importation of bagged cement was necessary as a palliative measure and that government needed to reconsider the ban.
It said that while it was in support of backward integration, Nigeria could not achieve self-sufficiency by 2013 going by current production capacity of six million metric tonnes compared with 18 million metric tonnes consumed.