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Deceptive Pricing: Why N3,500 ex-factory cement ‘price bonanza’ for consumers failed –BUA Group

Alhaji Abdul Samad Rabiu, Chairman of the BUA Group

*Kabiru Isyaku Rabiu, Group Executive Director of BUA Group, explains there was a price reduction for the company’s cement brand from N5,500 to N3,500 per bag from October 2, 2023, but consumers could not get the expected benefits, blaming failure to realise the objective on industry stakeholders frustrated implementation of the ‘price gesture’

Isola Moses | ConsumerConnect

Against the backdrop of what many have described as apparent ‘deceptive pricing’ of the company’s product in the market since October 2023, BUA Cement has explained why the so-called ‘price gesture’ largely failed to benefit Nigerian consumers after all.

ConsumerConnect reports Kabiru Isyaku Rabiu, Group Executive Director of BUA Group, rather reaffirmed that there was a price reduction for BUA Cement from N5,500 to N3,500 per bag, with take-off date for the new unit rate from October 2 last year.

Rabiu stated this while answering a question about whether the BUA Cement price bonanza was actually delivered to consumers or not in the West African country since last October on Arise News channel monitored in Lagos.

However, checks have revealed that there were complaints, particularly about the availability and apparent unchanged price of the product where available in limited quantities in most parts of the country despite the public announcement of the N3,500 price bonanza.

From individual cement consumers, products dealers, retailers, bricklayers to block moulders interviewed in several parts of Lagos and Ogun states, it was complaints galore about the near-unavailability of the cement brand, and or that a bag of BUA Cement still remained N5,500 as other brands since the Group Chairman’s announcement late September 2023 until recently.

Most consumers, especially established product retailers, block moulders, builders and construction engineers who talked to this publication in Ikeja, Agege, Iju-Ishaga, Agbado Station, Ijoko, and Adiyan Gas Line axis of Lagos and Ogun states had simply dismissed even a mere mention of the company’s claimed ‘product price bonanza of N3,500 at the time.

Kabiru, in the recent interview, nonetheless, contended that the price reduction was carried out from October 2, 2023, in line with the commitment of Alhaji Abdul Samad Rabiu, Chairman of the BUA Group, to ensure the accessibility and affordability of the product for consumers.

He also noted: “Federal Government can only do so much, but without the support of the other producers and middlemen being called to order, the average Nigeria will suffer. “BUA Cement price reduction actually did happene. Our Chairman made the commitment, and we actually fulfilled the commitment by running it for five months.”

Kabir further said: “We reduced our cement across our plant to N3,500, but that was actually x-factory price.

Why implementation of N3,500 per bag of BUA Cement didn’t work?

Kabir explained: “But, as you know, industries such as cement in Nigeria, when we do this kind of commitment, we were expecting other players to come along because if you look at the industry where we are operating our market share of 30-32%.

“And for us to make this gesture, other players were not doing it, and turn out to be very difficult for it to be fully implemented.”

He indirectly admitted the failure of the product price bonanza this way: “And so, we ran the programme for almost five months, and because other players did not follow suit, the distributors and the middlemen began to take advantage of our gesture.

“So, what happened was that even though we were selling the cement at N3,500 in order to support the economy and the users, there was no direct benefit at least to the end users because other players were selling at previous higher prices.”

The BUA Group admitted that with the scenario playing out in the cement industry, “it turn out to be increasingly difficult for us to continue, and whilst we were doing that, the cost began to go up, and we were forced to change our position a little bit.

“And while we were doing that we also discovered that some of our plants had some issues and that reduced production.

“We do not know whether it was by choice or it was a sort of maintenance, and so that put an enormous pressure on our cement supplies to meet the increasing demand and therefore, even widen the gap between what we were selling in the market x-factory and what the market was.”

Meanwhile, to worsen the matter for cement consumers, a bag of cement in the market now sells for between ₦10,000 and ₦13,000 or more, depending on the area of purchase in Nigeria, according to reports.

It is recalled that Alhaji Rabiu, Chairman of BUA Group, in conversation with State House Correspondents, following a visit to President Bola Ahmed Tinubu last year, had announced that despite various challenges, BUA is determined to ensure the accessibility and affordability of the product for consumers.

“You know the price that we have set will be N3,500 per bag. You know x factory of course plus VAT and then delivered to customers depending on the region.

“As you know, the factories that we have; one is in Edo, the other one is in Sokoto State,” said he.

The Chairman had explained the proposal: “For example, if you want us to deliver cement to you from Sokoto say to Lagos from Adamawa or to Maiduguri, the distance is quite far.

“So, dependent on the distance and dependent on the location. You know the price changes but we intend to keep that promise.”

According to him, the cement company site in Sokoto that would be inaugurated by January 2024 is expected to further expand the market across the country.

“We anticipate a combined annual production volume of about six million tonnes from these sites, which we expect to significantly impact the market.

“While facing some challenges, we are actively working to address and resolve them.”

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