The Federal Government may have stopped the importation of bagged cement following the expiration of the licences of some importers who were given special concessions by President Umaru Yar‘Adua late last year to import cement to bridge supply shortfalls.
Our correspondent exclusively learnt that the government had directed the Nigerian Customs Service to stop clearance of bagged cement at all the nation‘s ports.
In a a memo dated September 8, 2009, by the Comptroller-General, to all Customs formations, clearance of bagged cement at the Ports, including consignments under clearance are to be stopped until further notice.
Importers have faulted the development, especially the timing, which coincided with the onset of the construction season on the grounds that cement prices could hit the rooftop before the year runs out.
Some of the cement importers are also miffed that they would lose huge sums of money already committed to cement production, bagging and freight contracts with European and Asian firms.
Yar‘Adua, had last year, lifted the ban on cement importation emplaced in 2005 by the Olusegun Obasanjo administration in an attempt to drive down prices to about N1,000 per bag from about N2,200, by increasing supply to the market, which has a short fall of between 11 million metric tonnes per annum.
The government was worried that local production capacity, which is about seven million metric tonnes, was highly inadequate to meet surging demand for the key construction sector input.
To boost supply, it issued initial licences to some cement producing companies, including Lafarge WAPCO and Dangote Group, as well as six none-producers including BUA Group, Madewell Products, Reagan Renaissance and Minaj Holdings, which had showed interest in the cement business but were yet to set up production facilities, to import three million tonnes in June.
However, the group of non-producers, who are affected by the directive, say that they were yet to import a third of their quota before the directive to the Customs.
Chief Executive Officer, Madewell Products, Mr. David Iweta, said on Monday that the decision was ”ill-conceived” and was influenced by certain local cement producers who felt threatened by the import programme.
Our correspondent learnt that the cement producers and importers met with the Minister of Commerce and Industry, Chief Achike Udenwa, and his finance counterpart, Dr. Mansur Muhtar, two months ago where indications were given that the import licences would be extended to allow full quotas to be met.
At the meeting, local producers had complained that importers were at an advantage in terms of cost and had sought price concessions for low pour fuel oil, which accounts for over 30 per cent of production cost, but government rejected the proposal, pointing to the planned deregulation of the oil downstream.
Importers had pointed out that they also incurred huge costs including freight, Customs duty, tariffs, stevedoring and demurrage apart from exposure to exchange rate risks.
President, Reagan Renaissance Company, Chief Reagan Ufomba, said it was impossible for importers to stop production orders after they had been made.
He said, ”Importation is not an overnight affair. You have to place firm orders for the quantity you want and the branding. You have to sign contract for freight and contend with the infrastructure challenges at the ports.”
However, Muhtar, in an e-mailed response to our correspondent‘s inquiries through his Special Assistant, Media, Mrs. Deborah Okafor, said that the licences affected by the memo were given on the understanding that they would serve as a stop-gap and the importers would make concerted efforts to introduce some form of backward integration, so as not to discourage the local manufacturers.
He said, “The essence of allowing importation to bring the prices of cement at marginal levels has not been realised, as many of the importers have not been shifting the benefits to consumers.
”Currently, the Presidential Committee on Cement is reviewing the re-issuance of licences in a way to stop further abuses and create some balance. Any new licence will be strictly tied to the development of backward integration.”
