MOST Nigerians are struggling to cope with the rising cost of cement and may not be able to embark easily on housing construction with rising energy prices taking its toll on the commodity which is a basic material for housing construction.

Accordingly, DANGOTE, BUA, and Lafarge cement companies reported a 108.65 per cent rise in production cost to N1.24 trillion in the first six months of the year, spurred by higher energy costs.

The increase in the cement giants’ production costs was largely due to the rise in energy costs as the price of cement remains high, despite a price slashed by BUA Cement late last year.

An analysis of the companies’ 2024 half-year financial statements shows that production costs rose significantly as the companies spent more on energy costs.

Aggregate production costs for the three cement giants more than doubled to N1.24 trillion in the first half of 2024, relative to N592.32 billion in the same period in 2023.

A breakdown of the analysis shows that Dangote Cement Plc posted N833.27 billion as total production cost from N383.09 billion.

BUA Cement Plc recorded N254.66 billion from N114.94 billion, and Lafarge Africa Plc, N147.94 billion from N94.29 billion as production costs.

A production cost refers to all of the direct and indirect expenses businesses face from manufacturing a product or providing a service.

It includes a variety of expenses, such as labour, raw materials, consumable manufacturing supplies, and general overhead.

A cursory look at the line items that made up the production costs on the companies’ records shows an astonishing rise in the price of energy.

The Dangote Cement recorded N374.82 billion in energy costs, compared to N157.02 billion in the same quarter of 2023.

The figure represents 44.98 per cent of the company’s N833.27 billion total cost of production in the review quarter.

BUA Cement reported N130.15 billion in energy costs from N47.91 billion, representing 51.11 per cent of N254.66 billion of its total cost of production.

A recent disclosure by BUA Cement shows that the price of a bag of cement would remain high, despite an earlier slash in price.

The company had, on October 2, 2023, slashed the price of cement with immediate effect and promised to review the price upon completion of new plants, expected to increase its production volumes to 17 million metric tons per annum, The ICIR reported.

However, at the company’s 8th annual general meeting (AGM) on Thursday, August 29, the chairman of BUA Cement, Abdul Samad Rabiu, said energy costs are too high, and it contributes largely to the high cost of cement in the country.

He said, “We are currently building a mini-powered plant. We are doing this because energy costs are too high and that contributes largely to the high cost of cement in Nigeria. When the project is completed, the energy cost element will reduce and that will reflect in the price of the community.”

The BUA chairman hinted that the LPG-fired power project would be completed by next year, meaning until then the company’s cement price would remain high in the market.

Rabiu further cast blame on cement dealers for undermining the company’s plan to sell cement at N3,500 per bag, pointing out that consumers purchase the commodity as high as between N7,000 and N8,000 per bag.

He claimed a lot of dealers took advantage of the price slash but rather than pass the low price to customers, almost doubled the price they sold it to consumers.

Rabiu said the company sold over a million tons of cement to dealers at N3,500 per bag, hoping to benefit end-users.

He added that the dubious play by the dealers led the company to abandon its planned price slash.