Cement retailers in Lagos and Ogun states have clarified why BUA cement products continue to be sold above N5,000 per bag despite the company’s recent announcement of a significant price reduction.
Recall that on October 1, BUA Cement made headlines by declaring a 36.4 per cent cut in its ex-factory price, lowering it from N5,500 to N3,500 per bag, effective from October 2.
The decision came after Abdul Samad Rabiu, the founder of BUA Cement, met with President Bola Tinubu on September 16. BUA Cement attributed the price reduction to its ongoing effort to increase production capacity to 17 million metric tonnes per annum (MTPA) before the end of 2023.
This expanded production capacity enabled the company to lower its ex-factory price for licensed dealers and end users.
However, three weeks after this announcement, BUA Cement’s retail prices have remained above N5,000 in some stores in Lagos and Ogun states.
TheCable spoke with Olubukola Oluwadare, a cement retailer in Ikorodu, Lagos and it was revealed that BUA Cement does indeed offer the product at the N3,500 price at its factory in Benin.
However, retailers must visit the production site to purchase cement at this rate.
Oluwadare explained that BUA Cement representatives informed her that the company does not have sufficient trucks to distribute its products, requiring retailers to arrange their own transportation.
While Oluwadare initially partnered with another retailer to hire a truck, the cost, at N1,000 per bag, proved to be a discouraging factor. Consequently, she continues to sell only Dangote brand cement.
Oluwadare revealed that BUA lacks a sufficient fleet of trucks, and the company primarily uses its own vehicles for distribution.
Oluwadare further emphasised that when she inquired about hiring a truck affiliated with Dangote Cement to transport BUA’s products, concerns about potential issues arose.
In her estimation, the overall expense from purchasing BUA Cement at its factory and transporting it to her location in Ikorodu equates to nearly N5,050 per bag.
Another retailer in Ikorodu, who preferred to remain anonymous, supported Oluwadare’s explanation regarding the need to buy the product directly from BUA’s factory to access it at N3,500.
This retailer confirmed that the cost of transportation effectively wipes out any discount received, ultimately necessitating a sale price of around N5,000.
Abdullateef Abayomi, a cement retailer and block maker in Alagbole, Ogun State, echoed these sentiments, explaining that the new price cut cannot take immediate effect since many retailers still have BUA Cement stock purchased at the previous price.
Abayomi emphasised that implementing the new price cut could result in substantial losses for retailers who had already acquired their stock at higher prices.
He concluded that it is likely the new price reduction will fully take effect by December.
Notably, BUA Cement has not yet responded to inquiries regarding this issue.
