Investments in local cement capacity may be endangered, following reports that the government is planning to approve the importation of bagged cement. Sources among cement industry stakeholders have disclosed that the Ministry of Commerce is being pressured to seek presidential approval for some companies to import cement in 50kg bags.
It is feared that this would hurt companies which have invested in facilities to locally manufacture cement. This would represent a major policy reversal, barely six months after the government took a firm stand against imports of bagged cement.
Investigations have revealed that plans are being considered to permit a group of companies, including Minaj, BUA, Lababibi and Regan and Madewell, to import about 6Mta of cement in branded, 50kg bags. This is couched as a further intervention to relieve the supply pressures that have seen cement prices hit the roof.
But experts criticise this as a rather hasty step that does not take into account the likely impact on on-going local investments in cement. Other sources wonder why further action is being contemplated when the impact on prices of the import approvals granted in December 2007 has not been ascertained. Industry sources are surprised that government appears ready to reverse itself on bagged cement. “We need consistency and patience. Otherwise huge investments in cement plants across the country would be jeopardised,” Gboyega Akanbi of Cement Watch warns.
Cement industry sources say that despite contrary pressures, the government had in 2007 accepted the industry position that importation of bagged cement will have negative consequences. It was successfully argued that bagged cement imports would flood the market, squeeze prices and eliminate the prospect of any returns on the huge local investments being made.
Furthermore, cement stakeholders also advised the government to be wary of the danger of dumping. Given Nigeria’s often porous borders a regime of imports of bagged cement is liable to encourage massive smuggling into Nigeria of consignments delivered at neighbouring ports. Experts say this would result both in huge revenue losses for the government and crush any dreams of local cement production by making it uncompetitive.
The Federal Government late last year decided to marry the twin objectives of achieving self-sufficiency in cement and making cement affordable. Working with the cement industry stakeholders, the government identified the firms that had or were making verifiable investments in local cement production. At the end of the exercise, 13 plant owners and end users in the construction industry were granted import licences for bulk cement.
The successful companies included industry heavyweights such as Dangote, Lafarge, Flour Mills, Ibeto, Eastern Bulkcem and new investors in cement production such as Quacem, Westcom, Purechem and Topcem. The government’s decision was widely welcomed, and the companies have been busy securing financing, making orders and retooling their bagging plants in readiness for the approved consignments. The approvals came to about 12Mt. Some consignments from this batch of imports have already arrived, and more are expected to berth at the ports soon.
Sources said the idea of restricting imports to those firms with local cement investments was to protect their investments and promote the long-term goal of local self-sufficiency.