Why We Can’t Sell BUA Cement at N3,500 – Retailers

BUA Cement has announced its ongoing efforts to boost its production capacity to 17 million metric tonnes per annum (MTPA) by the end of 2023, resulting in a reduction of its ex-factory prices for licensed dealers and end-users.

However, despite this announcement, the cost of BUA’s cement has remained above N5,000 in various retail stores in Lagos and Ogun state.

Olubukola Oluwadare, a cement retailer in Ikorodu, Lagos, disclosed that BUA sells its cement for N3,500 at its factory in Benin but retailers need to physically visit the production site to purchase it at that price. Oluwadare explained that BUA Cement representatives cited a lack of sufficient trucks for distribution, leading retailers to incur the expense of hiring their own trucks for cement transportation.

Oluwadare mentioned that she had considered sharing a truck with another retailer, but the high cost, which amounted to N1,000 per bag, discouraged them from doing so. Consequently, she decided to exclusively sell the Dangote brand due to the more favorable logistics.

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According to Oluwadare, BUA Cement’s truck shortage forces them to rely on vehicles affiliated with Dangote Cement for transportation. Engaging Dangote Cement trucks for BUA’s products could potentially create logistical issues.

Oluwadare expressed discomfort with this arrangement, noting that hiring a truck would entail covering the expenses of the driver and offloaders. She calculated that when factoring in all these costs, the price would reach almost N5,050 for the end consumer.

Another retailer in Ikorodu, who wished to remain anonymous, confirmed Oluwadare’s statement about the option of purchasing the product directly from BUA’s factory at N3,500. However, they emphasized that the transportation costs alone negate the discount, necessitating a higher retail price, likely exceeding N5,000.

The retailer also highlighted that Elephant brand cement is priced at N5,300 and Dangote Cement at N5,400, and both brands are distributed to retailers under similar conditions. Retailers are burdened with hiring trucks, effectively taking on the role of distributors to stock BUA’s products and eventually sell them at prices exceeding N5,000.

Abdullateef Abayomi, another cement retailer and block maker in Alagbole, Ogun State, explained that the new pricing can’t immediately take effect due to existing stocks of BUA’s cement purchased at the previous price. Implementing the new price would result in losses for those who have already invested in their stocks. Abayomi anticipated that the new pricing would likely come into effect by December.

BUA Cement , according to Economic Confidential,didn’t respond to enquiries sent to the company.