Dangote Group says its cement is cheaper in Nigeria than in Ghana and that it is losing dollar earnings focusing on the Nigerian market.

“To ensure that we meet local demands, we had to suspend exports from our recently inaugurated export terminals, thereby foregoing dollar earnings,” he said, adding that the company also reactivated its 4.5 million ton capacity Gboko plant.

“While a bag of cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes,” it claimed in a statement amid claims the price of Dangote’s cement is higher in Nigeria than elsewhere.

Dangote Cement noted that the price of a bag of cement from its factories and plants in Obajana and Gboko was N2,450 and N2,510 at Ibese, including the Value Added Tax (VAT) as of April 12.

Devakumar Edwin, the company’s Group Executive Director in charge of Strategy, Portfolio Development, and Capital Projects, stated this in a statement in Lokoja on Tuesday.

According to him, the clarifications become necessary given the recent insinuations that the company sells cement in Nigeria at higher prices relative to its sales in other countries, particularly in Ghana and Zambia.

Though the company had direct control over its ex-factory prices,  Edwin said it could not control the cement’s price in the open market.

“This is all in a bid to guarantee that we meet demands and keep the price of cement within control in the country. Over the past 15 months, our production costs have gone up significantly.

“About 50 per cent of our costs are linked to the USD (dollar), so the prices of critical components such as gas, gypsum, bags, and spare parts; have increased significantly due to the devaluation of the Naira and VAT increase.

“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 to date while prices of most other building materials have gone up significantly,” he said.

The management of Dangote Cement Plc has clarified that the price of a bag of cement from its factories and plants across Nigeria (as of 12th April 2021) is N2,450 in Obajana and Gboko and N2,510 in Ibese, inclusive of VAT.

The clarification was made because of recent reports that the company sells cement in Nigeria at significantly higher prices relative to other countries, particularly Ghana and Zambia.

SaharaReporters had reported that  Dangote Cement Group sells its product in Southern African country, Zambia, for at most 110 Kwacha which equals to about N1, 800 in Nigeria, while the same product sells for not less than N3, 500 in Nigeria.

Dangote Cement Group has offered explanations on the difference in prices in both countries, saying it cannot control the prices of its product when it gets to the market.

Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, revealed that, while a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

He, therefore, frowned on misinformation that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

He described the allegation as false, misleading, and unfounded while giving the media persons present at the press conference copies of invoices from Nigeria and some other African countries (Cameroun, Ghana, Sierra Leone, Zambia) and urging them to conduct independent investigations on the price of cement across the West African coast.

Edwin further explained that while Dangote cement has 60% share of the market, other companies have the remaining 40%. DCP has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.

He said,  “Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception, as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity.

“To ensure that we meet local demand, we decided to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings. We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed four years ago, and run it at a higher cost, all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

“Over the past 15 months, our production costs have gone up significantly. About 50% of our expenses are linked to USD, so the cost of critical components like gas, gypsum, bags, and spare parts; has increased significantly due to the devaluation of the Naira and VAT increase. Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly. We have only adjusted our transport rates to account for higher diesel costs, spare parts, tyres, and truck replacement.

“Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” he said

In October 2006, George Marks, the then Managing Director of Julius Berger, described the mega stations it constructed with the NNPC as ‘technological wonders.’ Fifteen years later, some of these technological wonders, have become rotten mammoths floating on the waterways of the Niger Delta.

As early as January 2015, based on records on the Petroleum Product Pricing Regulatory Agency’s website, Nigerians have been paying 15 kobo per litter of petrol purchased to ensure these floating stations are kept supplied with petrol at the same cost it takes to do same in any part of the country. This in turn is supposed to make sure the stations dispense gasoline to Nigerians in riverine areas and boats at a similar cost with an NNPC pump in Lagos.

As at Wednesday March 30, 2021, the floating station on the Nembe watercourse was selling gasoline at N175 per litter – N13 more than the NNPC approved price of the commodity.

In Okerenkoko Delta State, where the first floating station was launched and the concept declared a ‘technological wonder,’ residents say the jetty carrying the pumps sits idle.

“People go to town to buy petrol from filling stations and transport to the creeks,” Williams Welemu, a resident of the community, said. “They sell in 20-liter measurements called tanks. A tank of fuel could cost between N5,000 to N6,000 at the moment depending on the distance.” While Nigerians pay a subsidised price of N162 to N165 for a liter of gasoline, residents of Okerenkoko and other riverine areas in Delta pay N250 to N300 for the same product. Yet Nigerians are taxed by the federal government to bridge the price difference.

From January 2017 till September 2020 – the last month the NNPC published its monthly financial and operational report at the time of writing, the sole gasoline importer has sold 67.05bn liters of petrol. This tallies up to N10.05bn in fees collected by the Petroleum Equalization Fund for the supply of petrol to NNPC’s 12 floating mega stations.

Between January and December 2017 though, the NNPC supplied an estimated 14.48bn liters of gasoline, summing up to a rounded sum of N2.17bn generated from the Marine Transport average.

“When they increase the price of fuel for us, there is no change. Even when they sell at the lowest,we still buy at this amount Nigerians are complaining of now,” Welemu says.

Each of these stations costed the federal government between N700m to N950m but several have been out of commission for an estimated five years now. Another is in Burutu, also in Delta State.

The community’s member at the House of Representatives, Julius Pondi, moved a motion in the Eighth Assembly asking the lower chamber to mandate the NNPC to supply petrol to the floating mega stations.

In September 2019, the NNPC said it would work with the navy to reactivate the non-functional floating stations. Pondi is skeptical as to where the security problem faced by the structures stem from.

“Has anyone vandalized any of the floating stations before?” Pondi asked rhetorically. “This thing has been kept there and nobody is touching them. So what is the security challenge that they are complaining about?” He mused.

In 2019, the corporation supplied a little over 20bn liters of petrol, equating to an estimated N3bn paid by Nigerians to keep the filling station in Pondi’s constituency supplied with gasoline priced at the same rate with any urban town. This is the highest amount generated from the MTA within the period in scope.

“Initially, when they got there they were selling but we were not buying at the same price with those in urban areas but it was manageable,” the reps member said.

A 2017 editorial by Delta-based website Gbaramatu Voice, claims the floating stations in the state functioned between 2013 and 2015. By this account, the first of the constructed floating stations worked for two years between October 4, 2006 and March 30, 2021.

Pondi’s claim that the floating stations do not dispense at the same price with those in hinter lands is

corroborated by the claims of residents in Nembe Bayelsa, where one of the 12 floating stations works.

“They sell at N175 per liter and it has been functional for some time now,” says Deipreye Feghabo. Another resident of the area, Olali Ginah, says the station is functioning thanks to the construction of a road that has opened the precinct up.

“Before, they will get to Ogbia and use badge to siphon the fuel from the truck. They found it very difficult to operate,” Ginah explained. “Now Nembe is motorable so they can drive the truck up to the filling station and siphon the fuel directly.”

This logistical hitch could be the reason why Nigerians were futilely tasked N1.91bn between January and September 2020 to supply fuel to the residents of Southern Ijaw in Bayelsa.

“The last time I bought petrol with a Jerrycan it was N210 per liter,” Eriye Bruce, a resident of Oporoma in Southern Ijaw says. “I crossed over a canal to the neighbouring community to buy fuel. “The filling

station that sells petrol to Eriye and his neighbours is privately owned. It undoubtedly gets its supply from the NNPC but the government-owned mass of entities is unable to keep its own station supplied.

“It is really concerning that something that will serve our local government and nearby communities is not working. That station has been shut down over four years now and we don’t know why. There is nobody we can ask,” Bruce laments.

People in Oporoma have it better than those in Buguma – Asari-Toru local government Rivers State.

“The non-functionality of the floating station here is enormous,” says Brown Harry, a resident of the community. “You know there is no filling station here, we have to deal with these black marketers. We buy fuel at N250 per liter.”

NNPC says it supplied 19.79bn liters of petrol in 2018, implying that Nigerians paid N2.97bn to level out the price for residents of Niger Delta’s creeks. Harry reckons that the floating station at Buguma only worked the year it was installed, meaning no kobo from the Marine Transport average tax has been felt by the community for years now.

The News Agency of Nigeria said in a 2019 report that the 12 floating stations are situated in pairs across Bayelsa, Delta, Akwa Ibom, Cross River, Ondo and Rivers. The second floating station in Rivers is installed in Bonnie Island. A source said the station has dispensed petrol to no one for over two months now.

The uniquely designed filling stations were promised to indigenes of the Niger Delta’s creeks in 2004 by the then president, Olusegun Obasanjo. Media reports say he had noticed the petrol scarcity and the consequent price differential residents of these communities had to endure. He tasked the NNPC to find a means of supplying gasoline to these areas at a uniform cost with other parts of the country. This berthed the idea of floating stations.

The stations which were designed as jetties, were modelled by NETCO, the engineering arm of the NNPC. Seven of the communities where these floating stations are located were tracked and only the jetty in Arugbo – Ese-Odo local government Ondo State, sells petrol at N165 per litter.

Of the seven stations found, only the pumps in Arugbo and Nembe were functioning.

The Petroleum  Product Price regulatory agency (PPPRA) did not see this as a reason to delete the 15 kobo tax from its pricing template. Observers wonder if the agency thought it would be too insignificant?

Appolo Kimchi, spokesperson for the corporation, failed to respond to calls and text messages to clarify why the agency retained the MTA.

Spokesperson for the Petroleum Equalisation Fund (PEF), which manages the MTA and the Bridging fund, failed to respond to calls to explain how the transport average has been applied in the last five years. In 2019, a source in the ministry of petroleum resources told Sahara Reporters that the MTA was not been drawn down by the NNPC and the ministry was considering dropping it. This does not seem to have happened, with the PPPRA retaining the 15 kobo tax in its March 6, 2020 template.

The government has to explain to Nigerians how it uses both the MTA and the bridging fund of N7.51 per liter, which a recent report indicates yielded N943bn in 2020 alone. Data from the Nigerian Bureau of Statistics and the sources spoken to for this story, suggests that both the MTA and the bridging fund have failed to solve the problems they were designed for. There are concerns about the use of the funds generated.

This story was produced under the NAREP oil and gas 2021 fellowship of the Premium Times Centre for Investigative Journalism

Source: Sahara Reporters