BUA’s plan to sell cement at N3,500/bag frustrated by dealers – Rabiu

AbdulSamad Rabiu, Chairman of BUA Cement, has revealed that his company’s effort to sell cement at an affordable price of N3,500 per bag in 2023 was undermined by the actions of cement dealers.

According to Rabiu, BUA Cement supplied over a million tons of cement at this price, with the intention that the savings would be passed on to end-users.

However, speaking in Abuja, Rabiu explained that dealers instead sold the cement at inflated prices, ranging between N7,000 and N8,000 per bag. As a result, BUA Cement had to abandon the initiative, as it was never meant to facilitate excessive profits for the dealers.

Rabiu also pointed out that BUA Cement was unable to control the dealers’ pricing strategies, which led to significant markups, and the company had no means of enforcing lower prices in the open market.

He said, “So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them.

“Some were selling at N7, 000 and 8 000 per bag. They made a lot of money with a very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing.

“And then, because of the issues that Nigeria faced at the time about devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy.

“We wanted that price to stay at that level but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.

“I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy.”