The Cement Producers Association of Nigeria (CPAN) has petitioned the Presidency over the high cost of the commodity in Nigeria.
In a letter addressed to the Presidency, at the weekend in Lagos, Mr. David Iweta, CPAN President, who is also a member of Nigeria Chambers of Commerce, Industry, Mines and Association (NACCIMA), said that the price of cement in countries that have attained sufficiency in cement production, like Nigeria, is N500.00 per 50kg bag, while cement in Nigeria is still selling at 300 per cent above what same product is selling in other countries like Egypt, China, Taiwan, India, Japan, Norway, Turkey, Indonesian, Pakistan, Iran, Iraq.
He said this is why local manufacturers constantly declared annual Profit after Tax (PaT) in the region of N120 billion –N130 billion for the past three years.
Iweta said the international best practice for cement manufacturing is for investors to earn IRR (internal rate of return) in region of 25 per cent, but experience has revealed that Nigerian cement investors are earning over 150 per cent IRR in cement investment such that investors recoup their investment within two years of their investment.
“By this token, all such local manufactures claiming large investment have since recovered their investments. It is regrettable that the price of the product is hovering within N1, 800 – N2, 000 per bag. Based on the foregoing, he said that CPAN has strongly recommended that Mr. President should revisit this strategy by allowing unexhausted licenses to be fully utilised and consider granting more licenses and abolish the introduced levy of 20 per cent with 15 per cent duty but retain the five per cent duty and five per cent vat on imported cement.
”This will force the local cement manufacturers that are hiding under the high cost of imported cement which attract 45 per cent extra cost comprising duty, levy, NPA, NIMASA , in addition to cost of freight in region of$50.00 per metric ton,” he said.
He disclosed that the total extra cost paid on imported cement is in the region of N 900.00 per bag. Imported cement will sell for N1, 000 per 50kg bag if the Federal Government retains duty and vat at five per cent each on the imported cement.
”The local manufacturers are still at a better position to make N500.00 profit per bag owing the fact that they make use of free local limestone and could sell cement for N500.00 per 50kg bag,” Iweta said.
Commenting on the housing deficit in Nigeria is estimated at 17million, he said if the Federal Government is committed to filling the gap in the housing sector, this sector alone is capable of providing employment for 34 million Nigerians.
