Competition regulator cites possible price manipulation as experts point to energy, logistics, taxes and supply constraints

The Federal Competition and Consumer Protection Commission (FCCPC) has launched a cement price probe after a three-month cross-border study raised concerns that Nigeria’s soaring cement prices may not be fully explained by production costs and market conditions.

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The commission, led by Executive Vice Chairman and Chief Executive Officer Tunji Bello, said on Tuesday that its preliminary findings suggested possible manipulation in the Nigerian cement market, against the backdrop of substantial domestic production capacity and abundant limestone resources.

The investigation was conducted by the FCCPC’s Anticompetitive Practices Department following widespread complaints about the rising cost of cement.

It compared Nigeria’s market with those of Kenya, Tanzania, South Africa, Egypt, Morocco, Algeria and Togo.

The findings have placed fresh scrutiny on an industry where a 50kg bag of cement reportedly rose from between N9,300 and N9,700 in January to N10,500 to N13,000 by mid-year, with prices reaching N13,000 to N15,000 in some locations by July.

The commission said Nigeria has installed cement production capacity estimated at between 60 million and 65 million metric tonnes annually, while domestic consumption stands at roughly 25 million to 30 million tonnes.

That apparent surplus has become central to the regulator’s questions over why greater production capacity has not translated into lower prices for consumers.

The FCCPC said its preliminary comparison showed that cement was available at significantly lower prices in several African markets.

In Kenya, a 50kg bag was estimated at about $5.40, equivalent to N7,344, while Tanzania recorded about $4.80, or N6,528.

In Togo, which the commission noted has no limestone deposits, the price was about $6.75, or N9,180.

The commission stressed that the figures did not, by themselves, establish wrongdoing. Instead, they provided grounds for a deeper examination of whether prevailing prices were being driven by legitimate costs or anti-competitive conduct.

“Cement occupies a strategic place in the Nigerian economy,” Bello said. “Its price affects the cost of building a home, developing commercial property, delivering public infrastructure and, ultimately, the cost of doing business.”

He added that the commission’s responsibility was to establish the facts rather than assume that high prices were necessarily the result of unlawful conduct.

“Businesses are entitled to make legitimate commercial decisions and earn returns on their investments,” Bello said. “Competition law does not prevent that.”

Industry participants have previously pointed to several pressures affecting cement production, including energy costs, naira depreciation, imported machinery and spare parts, transportation and logistics.

The FCCPC said it was testing those explanations against verified information on production costs, capacity utilisation, pricing and wider market conditions.

The investigation will examine possible coordinated conduct, abuse of market power, restrictions on domestic supply and anti-competitive distribution practices.

The commission has issued Notices of Commencement of Investigation and Summons to Produce to key industry players, seeking records covering pricing methods, production, capacity utilisation, exports and commercial relationships.

The probe comes after months of concern over cement affordability and its effect on construction.

In June, Minister of Works David Umahi called on cement manufacturers to reduce prices, saying the cost of the commodity was putting pressure on infrastructure projects and contributing to demands for contract variations.

Government discussions with major producers have also previously identified high gas costs, import duties on spare parts, poor road networks, foreign exchange pressures and cement smuggling as challenges affecting the industry.

Recent market reports indicate that prices remained elevated through July, with 50kg bags selling for roughly N12,000 to N15,000 depending on brand and location.

Industry analysts have similarly identified energy, foreign exchange and logistics costs as important pressures.

For construction industry stakeholders, however, the explanation may be more complicated than a simple question of production capacity.

Soji Adeniji, Chairman of the Lagos Chamber of Commerce and Industry Construction Group, said his experience with a project in Canada reinforced concerns over the competitiveness of Nigerian cement prices.

He said a comparison made by an associate looking to source cement from Nigeria ultimately found supplies from Turkey and some other countries more price-friendly.

Adeniji also questioned claims that weather-related disruptions were responsible for recent scarcity, pointing to other factors along the production and distribution chain, including taxation, infrastructure and logistics.

Professor Akpan Ekpo, an economist and public policy scholar at the University of Uyo, meanwhile, suggested that supply pressures could be contributing to the problem and urged government to examine the sector closely while improving access to finance for businesses involved in cement production.

Another construction researcher, Samuel Shonibare of the Nigerian Institute of Building and Yaba College of Technology, called for greater investment in alternatives to conventional cement.

Shonibare said research into materials such as rice husks as partial replacements for cement could eventually reduce dependence on the commodity and help ease price pressures.

Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, urged the FCCPC to make its investigation more comprehensive by examining the underlying cost structures in both Nigeria and the countries used for comparison.

He said a meaningful comparison should account for production costs, taxes, energy, logistics and other factors affecting prices in each market.

The FCCPC’s investigation therefore comes at a crucial moment for Nigeria’s construction sector, where cement costs have a direct bearing on housing, commercial development and public infrastructure.

For consumers and builders, the eventual outcome will be significant.

If the investigation establishes that legitimate production and distribution costs are primarily responsible, attention may shift towards reducing those structural pressures.

If anti-competitive practices are uncovered, the regulator could face the more formidable task of restoring competition without disrupting legitimate investment in the industry.

For now, the commission has made clear that its latest findings are preliminary.

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The cement price probe will determine whether Nigeria’s unusually high prices reflect the genuine economics of producing and distributing cement or a market that is failing to deliver the competitive outcome consumers should expect.