Market Forces Crippled Plan To Sell Cement At N3,500/bag – BUA
BUA Cement has explained that the plan to sell a bag of cement for N3,500 has been crippled by market forces. The company gave this explanation in response to the seven-day ultimatum given by two civil society groups demanding the company sell its cement at N3,500 per bag or face picketing.
BUA Cement initially fulfilled its pledge to sell cement at N3,500 ex-factory for several months before discontinuing the offer. The executive director, Mr. Kabir Rabiu, stated that the company hoped other industry players would join in making cement more affordable. However, BUA could not sustain the reduced price due to middlemen and wholesale agents preventing the end-users, the main targets of the price reduction, from benefiting.
Additionally, the rising exchange rate and electricity generation costs, coupled with the fact that 90% of raw materials for cement production are locally sourced, did not support the continuation of the N3,500 price.
Civil society groups, Advocacy for Good Governance and Rumen Royal Foundation, have called on BUA for a public apology for 'misleading Nigerians' with its initial announcement, as the price of BUA cement rose to N10,000 per bag.
Insights and Analysis:
- Market Dynamics: How do market forces and the role of middlemen impact the pricing strategies of major cement producers?
- Sustainability of Price Reductions: What challenges do cement companies face in maintaining reduced prices for their products?
- Consumer Expectations vs. Reality: How do announcements of price reductions affect consumer expectations, and what are the implications when companies cannot sustain these prices?
Source: Leadership News
