Fuel and power costs soar in Nigeria

Dangote Cement and BUA Cement spent a combined NGN173.54bn (US$413.8m) on fuel and power in the first half of 2022, up 38.3 per cent on the same period a year earlier. Fuel and power accounted for 41.3 per cent of the total cost of sales reported by the two cement firms over the six-month period, according to Nairametrics.

Taking each company in turn, Dangote spent NGN129bn on fuel and power in the first half of 2022, up 31.3 per cent YoY, causing the cost of sales to advance by 16.8 per cent. BUA Cement spent NGN43.58bn on energy in the opening six months of 2022, an increase of 64.7 per cent YoY, pushing the cost of sales up by 47.4 per cent YoY.

Although some of the increase in the cost of sales was attributed to the depreciation of the Nigerian naira, rising inflation is also being blamed with the country's inflation rate reaching 18.6 per cent in June this year, its highest level for 11 months. With the headline inflation rate for July 2022 standing at 19.64 per cent, up 2.27 percentage points on the same month a year earlier, there is no sign of cost pressures on Nigeria’s cement producers easing anytime soon, particularly for gas and raw materials, says Nairametrics.