The executive director, Projects and Technical, BUA Group, Yusuf Binji, said the group is determined to increase investment drive in the country by creating new industries and expanding existing ones. In this interview with OLUSHOLA BELLO, Binji noted that the backward integration policy in the cement industry has allowed tremendous growth.
Is Obu plant a new construction plant or part of Edo Cement Company Limited, Okpella?
Obu plant is located in Okpella, Edo State and owned 100 per cent by the BUA Group which is one of the major conglomerates based in the country. It is highly diversified into sugar refinery, flour manufacturing, cement manufacturing, pasta production and all kinds of products. Right now, the Obu plant is one of the many cement projects we are doing in Nigeria. It is a modern plant with up to date facilities. It is technologically advanced and at the end of the construction period, we will be producing three million metric tonnes of cement per annum. The plant is scheduled for completion and will be commissioned in February, 2015 and by May, 2015, the products will be available in the market.
Where is your target market?
As you can see, the Obu cement plant is located in Edo State and has a nice geographical area. The location is very good, being in the mid-west and it is very close to the cement market in the north, with excellent road networks in the south west and to the east. So this place is at a strategic location to adequately distribute cement all over Nigeria.
Apart from Obu, how many cement factories does the BUA have?
The BUA Group currently has three cement plants which are the Edo Cement, Obu Cement and Cement Company of Northern Nigeria (CCNN), Sokoto. At the moment, new production facilities are being built in Sokoto.
The Obu plant is a green field cement plant and this means it has not been in existence before and the BUA is building it from the scratch. That of Sokoto is a brown field project because it is an existing plant which has been in operation since 1967. That plant was expanded in 1985 and right now, the BUA Cement is just adding an additional production line to it that will almost triple the capacity of what is there.
While the Edo Cement was established in 1972 and formerly called the Bendel Cement producing the Rhino brand, it was recently acquired by the BUA Group and in the process of being reactivated.
What is the total capacity of the BUA Cement plants now?
The CCNN has an existing production line with a capacity of 500,000 tonnes per annum. An additional line is being added to it with a capacity of 1.5 million tonnes per annum while the capacity of the Edo Cement is 300,000 tonnes. The OBU plant, after completion, is expected to produce three million tonnes per annum of cement capacity. The CCNN and Edo cement plants are producing 42.5 cement grades while the Obu plant will produce any kind of cement that is allowed by the Nigerian Industrial Standards (NIS).
What are the corporate social responsibilities put in place by the company to ensure good working environment here in Okpella?
Before any project is embarked on in the country, you are mandated to carry out an Environmental Impact Assessment (EIA) report and that has already been done. All the mitigation measures were identified and are being currently implemented. Recently, environmental inspectors came to ensure compliance and we have no issues whatsoever with the community.
The community is also being carried along with the construction of the project because they are being employed by our building contractors and also when the plant starts operations, a lot of them will be employed.
How has the backward integration by the federal government affected the cement industry?
The backward integration policy by the government was a very good concept. About 10 years ago, Nigeria was producing about two to three million metric tonnes of cement, but currently, the installed capacity in Nigeria is about 30 million metric tonnes per annum and this is as a result of the good policy by the federal government which has allowed the existing and new entrants to venture into and establish cement plants, increasing the capacity to 10 to 15 per cent every year, leading to high expansion in growth.
Can we say Nigeria is self-sufficient in cement production?
In 2012, Nigeria was almost self-sufficient in cement production and that is why you have seen the ban on importation of cement because we believe we have the capacity to satisfy all the markets in Nigeria. For example, let us use one of the indices to quantify cement consumption, the per capita consumption in Nigeria as at 2013 is 120 kilogrammes (kg) per person. That means just about two and half 50kg bags per cement.
Looking at some other Africa countries, 250kg per person in Ghana means five 50kg bags per person. So if Nigeria is to move with the same consumption with Ghana that means the cement requirement in Nigeria will go up to about 40 to 50 million metric tonnes per annum so we can see that there is still the potential to build many factories if everything is going well in Nigeria.
What is the company doing about price strategy in attracting customers?
Yes, when we start production we are going to fix the prices which will be competitive and attractive to our customers. We are starting from ground zero here in Obu plant and are going to hit three million metric tonnes with aggressive marketing strategic. The main aim, actually is to make cement affordable to all Nigerians. The essence of the backward integration policy is to ensure local production, generate employment, lower the cost of energy. With all these in place, Nigerians are going to smile.
What can you say about multiple taxation affecting manufacturing companies’ profitability?
Producing finished goods in Nigeria is at a high cost, considering the cost of energy which sometimes constitute about 40 per cent of the production cost and multiple taxation is killing the real sector.
There are a lot of taxes that are being levied on the cement industry in one way or the other and the Cement Manufacturer Association (CMA) has made submission on the double taxation by local, state and federal authorities. Of course, we will like to see the harmonisation and reduction of the various taxes levied on the manufacturing sector.
In what area do you need government’s assistance?
There are so many players in the industry and this is a competitive environment. Nigeria is a free market economy and there are the forces of competition that are at play. I will advise the authority to create a conducive and level playing field for all players. Also, cement transportation is still tacky and the need to develop our rail network is essential.