Why Cement Is Still Expensive In Nigeria —BUA MD

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Minister of Information and Culture, Alhaji Lai Mohammed, recently toured BUA Cement plant in Sokoto. During the visit, the Chief Executive Officer of BUA Cement, Yusuf Haliru Binji, fielded questions from journalists on sundry issues about the company and the industry. Sulaimon Olanrewaju presents excerpts:

Minister of Information and Culture, Alhaji Lai Mohammed, has just toured your facility here in Sokoto. What does this visit portend for BUA Cement?

The visit of the Minister of Information and Culture, Alhaji Lai Mohammed, to BUA Cement in continuation of the tour of public and private sector projects across the country is quite appreciated by the BUA Group.  As to the impact which the visit has left on the profile or rather the image of the company, one can say that it is a positive and applauding development as BUA Cement was counted as one of the companies that are impacting positively on the lives of Nigerians. Commendably enough is that the minister’s tour was highlighted with about 30 journalists drawn from the print, electronic and social media, as well as from public and private media and there was also a documentary team from the ministry. Without doubt, it is an indication of recognition of the company for being among companies that are uplifting Nigeria’s economy as it is contributing to the country’s Gross Domestic Product (GDP).

The minister said the favourable business environment provided by the government since the inception of this administration can be attributed to the boost recorded in BUA as cement production by the company has increased by 300 per cent. What is your take on that?

The minister’s assertion has not in any way differed from facts and figures we have in our repository. We concur with the minister’s information as the massive increase in production we have recorded so far, especially since 2015, was made possible by the conducive business environment provided by the Federal Government.

What are the favourable conditions engendered by the Federal Government that have contributed to increase in production at BUA Cement factory?

The favourable conditions include the granting of Pioneer Status which enables BUA Cement to enjoy tax holiday, the ban on importation of cement, backward integration policy and the divestment of government shares from cement companies. I must say that with the enabling business environment spurred by the incentives that BUA Cement has recorded more than 300 per cent increase in production between 2015 and now. That’s from 3.5 million tonnes per annum in 2015 to 11 million tonnes per annum now.

What economic impact do you think the increase in production has left on the nation’s economy generally?

The boost in production recorded by our cement company has positively impacted on the economy as our Sokoto Plant alone, for instance, has created 10,000 direct and indirect jobs, and has also been earning foreign exchange for the country as we continue to export our products to Niger Republic; which is just 100 kilometres from the location of the plant, as well as Burkina Faso, especially during the rainy season when construction is at its lowest. Let me assure you that the boost has not started as we have put adequate facilities on ground.

For instance, we have in the last five years completed four new cement plants of similar capacity in Edo State and we are set to complete two more plants soon. With this, it is expected that total production for BUA Cement will amount to 17 million tonnes per annum by 2023.

So, you can see that with what we have invested, more massive production is expected in a few years to come. In fact, the three million tonnes per annum line IV of the Sokoto Plant, which was inaugurated by President Muhammadu Buhari in January this year, has taken the combined installed capacity of the factory’s Lines 2, 3 and 4 to five million tonnes per annum.

Much has been said about the Sokoto Plant in terms of its sophistication, can you throw light on its technological features?

Without being exaggerative, the Sokoto Plant is one of the most modern cement plants anywhere, with gas analysers used in regulating carbon emissions released into the atmosphere; air purifying mechanisms set up to enhance the quality of air released from the cement manufacturing process and filters that are capable of capturing 99.9 per cent of dust in order to make the environment healthy and conducive for the workers and customers alike.

The plant is the first cement plant in Nigeria to use Liquefied Natural Gas (LNG) to generate power thereby replacing coal in its kiln, and in the same vein, the plant generates 50MW of electricity to power its production machinery. This has made the plant environmentally friendly to also curb climate change.

I am sure when the AKK gas pipeline project is completed, it will drastically reduce the time and cost of transporting gas, which is currently being trucked from Port Harcourt to the plant. At least 20 trucks of LNG are brought here daily from Port Harcourt. Imagine the costs and the logistic challenges involved in this. The beauty of it all is that the Sokoto plant is operating at over 90 per cent of its installed capacity and loading between 250 and 270 trucks per day. The plant has a total of 700 trucks for cement distribution.

Not only that, BUA Cement is listed on the Nigerian Stock Exchange (NSE) with a market capitalisation of N2.5 trillion, and it is the fourth-largest company on the NSE; the second largest cement producer in Nigeria with 25 per cent of the market and the largest cement producer in the country’s Northwest, South South and South East.

BUA Cement has also invested heavily in Corporate Social Responsibility (CSR), and the company is involved in the provision of health services, scholarships for students, provision of housing, roads, and electricity for host communities.

How committed is BUA Cement to the betterment of its operating environment?

As a responsible organisation, we are fully aware of the responsibilities and obligations attached with becoming market leaders in the construction sector. We have been harnessing local resources, investing in human capital development, setting up efficient industries and giving back to communities through various social impact/intervention programmes. We foresee a great Africa driven by determination and disruptive innovation in delivering quality products and services. Hence our investments in strategic ultra-modern eco-friendly cement plants to lay the foundation for growth – and a supply network to reach our customers with ease. While constructing our ultra-modern cement producing facilities, we took proactive measures against CO2 emissions, noise and dust pollution. Our facilities come with carbon emission gas analysers monitored by our operators. Dust collectors installed around the cement facilities purify the air quality. Our product, Portland- limestone cement, is also environmentally friendly. Less fossil fuel is expended in the production of Portland limestone cement than the conventional Portland cement. In executing its CSR strategy, BUA Group implements initiatives in line with the Global Sustainable Development Goals (SDG), aimed to drive economic growth and encourage human development capacity. Over the years, BUA Group has invested millions of dollars in extensive social impact projects towards the development of host communities by investing in health care, education, water and sanitation and other areas.

 

What is competition to your organisation? Is BUA Group afraid of competition?

BUA Group is not afraid of competition in local and international markets because of the significant investments made in the sectors of the economy and will continue to expand across the country. In October 2019, the BUA Group announced a merger of its two cement subsidiaries, the Cement Company of Northern Nigeria and the Obu Cement Company, in a bid to become the country’s second largest cement producer by volume by 2020. The deal was concluded in January as BUA Cement listed on the Nigerian Stock Exchange with a market capitalisation of N1.2 trillion ($3.3 billion). The BUA Group has invested over $2 billion in its cement business over the last four years, which has helped to boost the company’s output. BUA will save Nigeria hundreds of millions of dollars.

 

In what ways can the supply shortfall in cement be addressed?

The per capita consumption of cement in Nigeria is about 123kg per person, which is less than two and a half bags of cement. Ghana is about three bags per person, so their consumption is very high. That is where Nigeria should be as a country. That means there is still an underproduction in Nigeria because, last year, the consumption and demand was about 30 million tonnes and we should be like 60 to 70 million tonnes, even countries like Senegal, Ivory Coast, Egypt are far above Nigeria in terms of per capita consumption.

We have factors of demands and supply that do influence the price and definitely Nigeria still has a very low per capita consumption of cement compared to Ghana.

Cement business is capital intensive, but we must invest in Nigeria to make her grow. As I have said, our consumption, which is two and a half bags per person, is among the lowest in the world. The world average is 650kg per person, which is 13 bags per person. So if we are to get to that level, you need about 10 more of this (BUA Sokoto) facility in Nigeria and that is where we should be.

To address the demand shortfall, BUA Cement company is targeting 17 million tonnes per annum by 2023, believing that, as the supply increases, the factors of demands and supply will come into play and you will see the benefits of price reduction coming down to the people.

Right now, the margins made by retailers are very high and this shouldn’t be the case. It should get to the people just a little above the factory price which I said, is about 30 per cent lower.

So, that is going to have an impact on the pricing. Now the demand is very high, exceeding supply and people are making a lot of margin based on this.

BUA Cement plans to increase its production capacity from the current 11 million metric tonnes of cement per annum to 17 million, to ensure its cement product is readily available across the nooks and crannies of the country.

BUA Cement remains the largest cement producer in the North West, South South and South East of the country and the largest private employer of labour in the North-West. BUA Cement (Sokoto plant) is primarily engaged in the business of quarrying, extracting, processing and dealing in limestone, as well as the manufacture and supply of cement.

How many persons has BUA taken off the labour market?

There are 443 permanent staff and together with all other ancillary jobs, the company generates about 10,000 direct and indirect jobs in the country.

Why cement is still expensive in Nigeria —BUA MD