Quote:
Originally Posted by Waves
The issues are little more complex than this. Although cost of production may be high in Nigeria, for Dangote Cement factories (BCC aside), the difference with foreing companies is not much. Energy (as you rightly mentioned) is the most important cost component in cement production and Obajana runs mainly on Gas like most of the foreing based firms. Ibese is also designed as such. My brother, few Cement companies in the world have EBITA margins above 50% like Obajana. The other important cost component in cement is Transportation. But since this affects both Imported and local cement, it is not an issue. By the way, how many Cement manufacturers enjoy 5 year tax holiday?
Lafarge factories (Ashaka and Wapco) are a different issue. Recently, i did some work with the board of Ashaka Cement and can tell you that Ashaka and Wapco face a different cost structure not only because Lafarge (like most french firms) is a very inefficient company but also that those French guys are busy skimming money out of these companies through many phantoms fees and useless projects. All this issue of houses, buses and hospitals are not very significant.
The issue with Ibeto is a long standing that started from Obasanjo's regime. Neither of the parties is telling the whole truth. Is not the same Dangote that bought and closed Savannah Sugar factory in Numan that is importing raw sugar from Brazil for Dangote Sugar Refinery. Ibeto is simply an opportunist trying ace the system the way Dangote did while Dangote is trying to throw away the ladder after climbing.
By the way, with the way last years budget was implemented and the falling GDP growth rate, it may well be the case that we have more of a falling demand issue than that of over supply.
|
Thanks bro....you have said it all! I have been struggling to build a hostel in Enugu for the past 3 years. Infact worked stopped since feb last year. I also know a couple of friend with the same constrait.
Clearly demand has dropped due to lower incomes. I expet these cement guys to lower their prices, afterall they all declared fantastic results at their 3rd qtr results
Re: Economicwatch
hispy99
knightofdelta
Linear Mode
