Back-off Cement or face the Consequences, Dangote tells Yar’Adua

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President Yardua

A fresh offensive to bring down the price of cement has already hit a snag as the powerful cement cartel led by billionaire business magnate, Alhaji Aliko Dangote are digging trenches ahead of what promises to be an imminent showdown with President Umaru Musa Yar'Adua over a planned move to grant more cement import licenses to importers outside the main industry cartel.

“If the government grants licenses to people to import cement, we'll close down our factories and lay-off workers; and when that happens, the domestic production capacity will reduce drastically; supply will still not match demand and the prices will even sky-rocket further. My advice is that the president should back-off the cement industry or face the consequences”, Dangote was quoted as warning Yar'adua by an industry source who elected anonymity.

The battle lines were drawn following the decision by the President to raise a panel on cement production with the aim of addressing the sky-rocketing cement prices in the country. Local media reports quoted Deborah Okafor, Special Communications Assistant to the Finance Minister, confirming that the Panel is headed by Finance Minister, Dr. Mansur Muhtar.

It also includes the Industry and Commerce Minister, Chief Achike Udenwa, as member. Ms. Okafor was also quoted as saying the panel had already visited some cement factories to assess the level of their investment and production capacity. The panel will propose measures that could mitigate the problems faced by most Nigerians in getting cement to build their houses.

Sources at the Presidency told that whereas President Yar'adua wants to force down the price of cement to at least N1000 per bag, Dangote remains hell-bent on keeping the price at its current average level of N2000 per bag, in order to continue reaping the astronomical profits he has been earning because of his oligopolistic status within the sector.

But Aliko Dangote, in a characteristically greedy move that put him on a collision course with the President, rallied the members of the cartel which includes local cement manufacturers to write a petition to Yar'adua opposing the move. Sources within the industry quoted an angry Dangote as cursing the president, who he reportedly accused of working against the interest of indigenous cement manufacturers. “This is an act of aggression by the President against indigenous cement manufacturers…local businessmen who create jobs and support the economic development of Nigeria; it is unpatriotic and we are going to challenge it with everything that we've got,” an angry Dangote fumed to an aide.

In both his private and public statements, Aliko Dangote has been heard making his case against the President's decision known. Aware that it will be practically impossible for new investors to enter the cement sector, Dangote has been pushing the government to raise the bar too high to keep other competitors out. Sources tell that Dangote is insisting that any new cement import license should come with a mandatory condition that the owner must set up a cement manufacturing plant in Nigeria.

The Presidential Cement Panel was created in the wake of an incisive report by on the contending factors and sinister maneuvers in Dangote's botched cement manufacturing plants deal with the Chinese Company, Sinoma. Following our report, Yar'adua directed the government to liberalize the cement supply chain by increasing the number of cement import licenses to other importers outside the cement cartel led by Dangote Cement.

Last year, Aliko Dangote signed a deal worth $1.85 billion to acquire four new cement plants from Sinoma; and promised his cement conglomerate would increase the manufactured cement production capacity in Nigeria to 26 million tonnes by 2010. Official statistics indicate that local production is nine million metric tonnes that is barely 40% of domestic demand, away from 16 to 18 million metric tonnes national requirement.

Dangote also promised that the new plants would be operational within 28 months and would combine with the existing assets to create the largest cement manufacturing that would not only make Nigeria self sufficient in cement, but also make the country a net exporter that can compete across the continent and globally. He added that the new plants when completed would provide direct employment for over 20,000 Nigerians as well as the provision of schools, hospitals, water, power and other developments in their host communities.

But Dangote scuttled the deal in a round-tripping Ponzi scheme that short-changed the financial syndicate comprising ten commercial banks that bankrolled the deal. Most of them have already backed out. learnt form a Presidential source that Yar'adua is poised to take on the cement cartel and Aliko Dangote head-on, especially as Yar'adua was still smarting from the public humiliation he suffered upon assuming office in 2007 when a similar initiative to bring down the price of cement was frustrated by the cement cartel.

“It is amazing how a shriveled conscience like Dangote can be allowed to inflict so much pain on other Nigerians,” the source told, adding:"President Yar'Adua is greatly concerned that the cement cartel is frustrating his efforts to enable more Nigerians own houses by keeping the price of cement above the reach of many citizens. He has therefore begun a process of dismantling the cartel as he did in the downstream sector of the oil industry to curb the excesses of fuel marketers and nothing; not even Dangote will stop the President.”

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