The Federal Competition and Consumer Protection Commission (FCCPC) has uncovered possible manipulation of cement prices in Nigeria following a three-month investigation into the industry.
The Commission disclosed this in a statement on Tuesday, saying its preliminary findings were contained in a 40-page field report prepared after an industry-wide investigation by its Anticompetitive Practices Department.
The probe followed complaints over the rising cost of cement and concerns that prices in Nigeria remained relatively high despite the country’s abundant limestone deposits, significant domestic production capacity and reported surplus capacity.
According to the FCCPC, all major cement manufacturers made their records available to the Commission except one.
It added that publicly available estimates indicate that three major companies control more than 90 per cent of Nigeria’s installed cement production capacity.
FCCPC compares Nigerian prices with other countries
As part of the investigation, the Commission conducted a cross-border assessment involving Kenya, Tanzania, South Africa, Egypt, Morocco and Algeria.
The study examined factors including limestone availability, population, production capacity and cement consumption.
The FCCPC said a 50kg bag of cement sells for about $5.40, equivalent to N7,344, in Kenya; $4.80 or N6,528 in Tanzania; and $6.75 or N9,180 in Togo, a country without limestone deposits.
In Nigeria, market intelligence reviewed by the Commission showed that the price of a 50kg bag of cement increased from between N9,300 and N9,700 in January to N10,500–N13,000 by mid-year.
By July, prices had risen further to between N13,000 and N15,000 in some parts of the country.
The Commission said its findings also showed that Nigeria has installed cement production capacity estimated at more than 60 million to 65 million metric tonnes annually, compared with domestic consumption of about 25 million to 30 million metric tonnes.
It noted that Nigeria is also a net exporter of cement to neighbouring countries.
The FCCPC said the level of excess production capacity should ordinarily exert downward pressure on prices in a competitive market. The failure of that expected trend, it said, warranted further scrutiny of the industry.
‘Cement prices affect entire economy’
Explaining the investigation, FCCPC Executive Vice Chairman and Chief Executive Officer, Tunji Bello, said cement was critical to Nigeria’s economy and that its price had implications beyond the construction industry.
“Cement occupies a strategic place in the Nigerian economy. Its price affects the cost of building a home, developing commercial property, delivering public infrastructure and, ultimately, the cost of doing business,” Bello said.
He explained that the investigation was not intended to dictate how businesses should operate but to determine whether the cement market was functioning competitively and whether consumers were benefiting from effective competition.
“When concerns persist about how such an important market is functioning, the Commission has a duty to look beyond assumptions and establish the facts,” he added.
Investigation moves to next stage
The FCCPC said it had issued Notices of Commencement of Investigation and Summons to Produce to key industry players.
The notices require the companies to provide information relating to pricing methodologies, production levels, capacity utilisation, exports and relevant commercial relationships.
According to the Commission, the next phase of the investigation will determine whether current cement prices are justified by legitimate production costs and prevailing market conditions.
It will also establish whether there is evidence of coordinated conduct, abuse of market power, deliberate restriction of domestic supply or any other anti-competitive practices.
The FCCPC stressed that its preliminary findings did not represent a final determination, saying further investigation would be required before any conclusions or enforcement measures are reached.
