In what construction experts describe as a major step to break the oligopoly enjoyed by some cement manufacturers and importers in Nigeria, President Umaru Musa Yar’Adua yesterday ordered the re-opening of Ibeto Cement Factory in Port Harcourt, Rivers State.
The factory was shut down by former president, Chief Olusegun Obasanjo, allegedly to protect the interest of his allies in the cement industry.
Already, chairman of the re-opened company, Chief Cletus Ibeto, has pledged to flood the market with quality cement in the next forty days, saying this would result in the crashing of price of cement.
Cement prices currently range from N1,300 to N1,600 per bag depending on the location in the country. It is cheaper in Lagos and costlier outside the state.
But the president of the Manufacturers Association of Nigeria (MAN), Alhaji Bashir Borodo, said yesterday that the re-opening of Ibeto Cement Factory, which imports the product, was a wrong move by government and would des-troy local efforts at cement manufacturing.
Speaking with newsmen in Abuja, Ibeto said, "The price of the product would be forced down by the availability of cement which we would flood the market within the next 40 days. Prices of cement will fall, we don’t believe and we are not a party to artificial scarcity and we are not out to create artificial scarcity by hoarding of the products."
He based his calculations for the price crash on the days which it will take to import. The cargo ship spends about 30 days on the high sea from China. It will take ten days of re-bagging at the Ibeto Cement factory in Bundu Amah, Port Harcourt.
The company will roll out 1.5 million metric tonnes of cement in the next one year, he said.
THISDAY checks, however, revealed that the proposed 1.5 million metric tonnes expected from Ibeto Cement may not have the desired impact on the Nigerian economy as the local demand for cement, which was estimated at about 10 million metric tonnes per annum last year, has now risen to about 13 million metric tonnes.
Further checks revealed that Dangote Group’s Obajana and Benue Cement Company (BCC) currently produce around at 8 million metric tones per annum. The Obajana factory produces at the rate of 5 million metric tonnes per annum and BCC 3 million metric tonnes.
West African Portland Cement Company WAPCO, another local cement manufacturer, as at last year, produced at the rate of 2 million metric tonnes, Ashaka Cement churned out one million metric tones and Sokoto Cement Company produced about 200,000 metric tones, meaning that there is still a shortfall in local production.
It was gathered that the presidential approval by President Umaru Musa Yar’Adua to re-open the Ibeto Cement factory closed in 2005 by former President Olusegun Obasanjo was as a result of an appeal by the Ibeto Cement dated June 8th, 2007 entitled "Appeal for the Reopening of the Ibeto Cement Factory in Port Harcourt".
According to documents made available to THISDAY, on the receipt of the letter from Ibeto Cement, President Yar’Adua in another letter dated June 25th 2007 to the Permanent Secretaries of the Ministries of Industries, Finance and the Director General of Customs and Exercise, directed that he be furnished with details and circumstances leading to the closure of the cement factory.
In separate replies to the President by the Permanent Secretary of the Ministry of Industries, R. O. Ogunbambi dated July 5th 2007, from the Permanent Secretary of the Ministry of Finance, Akin Arikawe, dated July 10 2007 and the Comptroller General of Nigerian Custom and Exercise, J. G Buba dated July 10 2007, they all recommended to the President for the opening of the Ibeto Cement factory.
Consequently, President Yar’Adua, in response to the commendations from the Federal Ministries of Industries, Finance and the Nigerian Customs, gave a presidential approval in a letter dated July 20 2007 that the closed cement factory be reopened immediately.
While the MAN president did not oppose the reopening of Ibeto Cement Factory, he said the thrust of local production should be encouraged since there were local companies producing cement.
"The flooding of the Nigerian market with imported cement should not be allowed at all. Nigerian companies are already pumping billions of dollars into production of cement in Nigeria. These investments will be rubbished if government allows uncontrolled importation of cement," he said.
"If government allows one company now then others will also queue up to get the right to import and in 10 years all the achievement we have made in local cement production will be lost
"The benefit of low prices, which massive importation of cement will bring is only short term. On the long run the economy will suffer.
"The same thing happened in 1975 when the government under General Yakubu Gowon embarked on massive importation of cement with a view to crashing the price of cement. The ports were jammed with imported cement and local production effort was annihilated," he added.