Why Retailers Still Sell BUA Cement at Old Price Despite Crash
Despite the announcement by BUA Cement of a reduction in the ex-factory price to N3,500, a recent survey by BusinessDay indicates that many retailers are still selling the product at the previous price. In various major markets across the country, a 50kg bag of BUA Cement is reportedly being sold at an average of N5,500. Rising transportation costs are cited as a primary factor contributing to this trend.
The management of BUA Cement had declared the price reduction on October 1, 2023, assuring that the new price would be implemented from the next day. Abdul-Samad Rabiu, Chairman of the BUA Group, reiterated the commitment to selling the product at N3,500 per bag from January 2024, despite challenges, during a visit to President Bola Tinubu in Lagos on December 28. However, Rabiu acknowledged that market prices might differ due to factors such as distance and location.
Industry experts, including Mustapha Umaru from CSL Stockbrokers Limited, note that the anticipated reduction in prices has not been prominently observed. Retailers are reportedly factoring in increased transportation costs, particularly following the removal of fuel subsidies. Abigail Alabi, a research analyst at Vetiva Capital Management Limited, suggests that the impact of the price reduction may be more noticeable in northern regions where BUA Cement has a stronger presence.
Distributors and dealers across various regions, including Abuja, Port Harcourt, Benin City, and Lagos, shared their experiences with our reporter. Many indicated that the price reduction had not been implemented, citing the availability of both BUA and Dangote brands at old prices. Some distributors mentioned challenges in obtaining new stock at the revised price.
BUA Cement, Nigeria’s second-largest cement company, with an installed capacity of 11 million metric tonnes per annum, aims to reach 17 million MT annually with new plants in Edo and Sokoto states by early 2024. Despite these expansion plans and efforts to influence market dynamics, the expected impact of the announced price reduction is yet to materialize consistently across different regions of the country.
