Business
BUA blames energy and transport costs for high cement prices
BUA Cement Plc has attributed the high cost of cement in Nigeria to rising energy, transportation, and foreign exchange-related expenses, saying the industry continues to face significant production cost pressures despite recent improvements in exchange rate stability.
Speaking at the company’s 10th Annual General Meeting held in Abuja on Thursday, the Chairman of BUA Cement, Abdul Samad Rabiu, said recent economic reforms, particularly in the foreign exchange market, were beginning to improve manufacturers’ planning.
The cement industry, he stated, remains heavily dependent on imported spare parts, equipment, and energy-related inputs, making it highly vulnerable to exchange rate fluctuations.
Mr Rabiu noted that although the naira depreciation created serious challenges for manufacturers, recent stability in the foreign exchange market had started easing some pressures, especially in shipping and logistics costs.
“The good news is that things are getting better because of the stability. You see, prices, especially shipping costs, are coming down,” he said.
He added that the reforms, though difficult initially, had created a more transparent market where manufacturers now have better access to foreign exchange.
“Today, whatever rate I get, it’s the same rate anybody gets,” he stated, noting that businesses could now plan several months due to improving exchange rate predictability.
Mr Rabiu said BUA remained focused on reducing operational costs through investments in energy infrastructure, local production, and logistics efficiency.
He highlighted that the company’s long-term strategy remained aligned with Nigeria’s industrialisation drive through expansion, operational efficiency, and increased local production. He also stated that its revenue rose to N1.2 trillion in 2025 from N876.5 billion in 2024, while profit before tax increased to N465.3 billion from N99.6 billion.
Profit after tax also rose significantly to N356 billion from N73.9 billion of the previous year.
The shareholders also approved a final dividend of N10 per ordinary share for the 2025 financial year, bringing the total dividend payout to N338.64 billion.
Input Cost
Speaking further about BUA’s pricing structure during a press conference after the meeting, Yusuf Binji, the Managing Director and Chief Executive Officer, said energy alone accounted for about 60 per cent of cement production costs.
“As you know, the price of cement, rightly or wrongly, is a consequence of input costs,” he said, and added that natural gas costs at one of the company’s plants in Edo State rose sharply following the naira devaluation.
“We were paying close to N4 billion for natural gas every month. At one point, it reached N16 billion a month. It became very difficult to absorb all these costs,” he said.
Mr Binji also linked rising diesel prices to recent tensions in the Middle East, and said the increase significantly affected transportation and distribution costs.
He further said diesel supplied to the company’s factories rose from about N930 per litre in March to nearly N1,850 per litre within two months.
“If you consider that we have to deliver cement to our customers using our own trucks that use diesel, even the price we are talking about, half of that price of a bag of cement is actually because of transportation.”
He also dismissed claims that cement was selling for between N13,000 and N15,000 per bag nationwide, insisting that prices in several regions remained lower.
“I have the prices from the northern region, and yesterday it was N11,100 a bag. So it is nowhere near the N13,000 or N15,000 a bag that was quoted,” he said.
Mr Binji, however, assured consumers that the company would continue reviewing prices in line with prevailing economic realities and changes in input costs.
“As we have favourable economic conditions in Nigeria, especially costs that are related to our input costs, we will adjust accordingly. Whichever way it swings, we will try to make sure that we give prices that are fair and decent to Nigerians.”
Despite current economic challenges, the company, he said, was continuing expansion projects to increase production capacity.
Mr Binji disclosed that BUA Cement’s new production line in Ososo, Edo State, was nearing completion, while another production line had been planned for Sokoto State.
He said the projects were expected to add about six million tonnes to the company’s annual production capacity, increasing total installed capacity to about 23 million tonnes per annum by 2027.
He noted that the company had invested heavily in bulk cement distribution by acquiring 500 specialised trucks to support major infrastructure projects across Nigeria.
READ ALSO: How I was denied entry into South Africa – BUA Chair
“We are even thinking of buying another 500 more,” he said, citing rising demand linked to ongoing highway and infrastructure projects, such as the Lagos-Calabar Coastal Highway.
The company added that it had temporarily reduced exports to prioritise local supply amid growing domestic demand.
Despite insecurity and broader economic pressures, Mr Binji said the company would continue expanding its operations nationwide.
“Our major aim is to be able to deliver cement everywhere in Nigeria at affordable prices, and that is what we will continue to do,” he said.
President Bola Tinubu announced on Tuesday that he approved the Deep Offshore Oil and Gas Tax Credit Order, 2026—a new fiscal incentive designed to attract large-scale investments into Nigeria’s deep offshore oil and gas sector.
The Nigerian leader hinted that the policy is aimed at making previously stalled offshore projects commercially viable by offering investors tax incentives and greater certainty over the fiscal terms governing their investments.
“I have signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, creating a clear and predictable framework capable of unlocking up to $50 billion in deep offshore investment, beginning with the approximately $10 billion Bonga South West project,” the president wrote.
He explained that for too long, some of Nigeria’s biggest offshore opportunities have remained stalled, and that “We cannot afford to leave that opportunity beneath our waters for another decade.”
The president explained that as capital moves, countries compete for the resources, and investors committing billions of dollars over many years need certainty.
“We are providing that certainty, with a clear window for existing deep offshore leases to reach Final Investment Decision by 31 December 2029 and qualify for the full standard incentive,” he said.
The order marks the tenth major policy directive of the Tinubu-led administration targeted specifically at the oil and gas sector. It clearly demonstrates the deliberate efforts being made by the government to remove constraints holding back investment, production and value creation in the country’s oil and gas industry.
But beyond attracting capital, the federal government says it wants the new investments to generate jobs, strengthen Nigerian businesses and build local technical capacity.
“Our natural resources must work harder for our people. Nigeria First,” the president wrote on his official Facebook page on Wednesday.
Why did the government introduce the new incentive?
The deep offshore framework announced on Tuesday came seven months after Shell Plc signalled moves to renew and expand investment push in Nigeria, citing improved political stability, policy consistency, and leadership as key factors driving its confidence in the country’s energy sector.
During a courtesy visit to President Tinubu early this year, the Chief Executive Officer of Shell Plc, Wael Sawan, disclosed the company’s investment plans and explained that Nigeria now stands out as one of the most attractive destinations for capital allocation within Shell’s global portfolio.
“We think there is more to invest here, and we understand the vision that you (President Bola Tinubu) have for the country, and so we are indeed working on a project, Bonga Southwest, that could potentially, if we get to an FID stage, see us, with the partners, invest around $20 billion in foreign direct investment,” Mr Sawan said at the time.
The policy was also announced less than a month after 31 companies emerged winners of 37 oil and gas blocks in Nigeria’s 2025 Licensing Round following the conclusion of the commercial bid conference held in Abuja last month.
Nigeria has significant oil and gas resources located in deep offshore fields, but several large projects have remained undeveloped for years. Similarly, oil and gas exploration activities across Nigeria’s major oil fields have generated significant environmental and economic impacts over the past decades. Shell’s activities across the Niger Delta have resulted in a plethora of environmental issues including several lawsuits. Pipeline vandalism, insecurity and vague regulations/policies have also prevented investors from investing in Nigeria’s deep and shallow reserves at a larger scale.
On Tuesday, the government says high development costs, complex project economics and uncertainty over fiscal terms have discouraged investors from committing the billions of dollars required to develop these fields.
Deep offshore projects are particularly capital-intensive because they require specialised vessels, drilling equipment, subsea infrastructure and advanced technology.
At the same time, oil companies have several investment options around the world and generally commit capital to projects where the fiscal and regulatory environment provides sufficient certainty over the long term.
The new framework is therefore intended to make Nigeria’s deep offshore projects more competitive and give investors clearer terms for making long-term investment decisions.
How much investment is Nigeria targeting and what is the tax incentive?
The federal government estimates that the new framework could unlock up to $50 billion in fresh deep offshore investments.
One of the major projects expected to benefit is the Bonga Southwest-Aparo development, which has an estimated investment requirement of about $10 billion.
The government expects the policy to help move such projects from prolonged delays to final investment decisions, construction and eventual production.
Projects that commence investment within the qualifying period, up to 31 December 2029, are expected to benefit from the incentives provided under the framework.
A review of the 13-page order document by the government indicated that the Nigerian government is offering investors a more favourable and clearer tax treatment to improve the economics of qualifying deep offshore projects.
The idea is to reduce the tax burden associated with developing these capital-intensive fields, thereby improving their expected returns and making them more attractive to investors.
For companies considering whether to commit billions of dollars to a project that could take years to develop and operate for decades, the certainty provided by a clearly defined fiscal framework can be as important as the size of the incentive itself.
The newly signed order has provided a distinctive framework for the government and prospective/eligible investors to operate in an atmosphere that is fair and beneficial to both parties.
What does Nigeria get in return?
The government says the policy is not simply about attracting foreign capital.
President Tinubu has emphasised that the new investments should also translate into tangible benefits for Nigerians.
The approved projects are expected to create employment for indigenous engineers, welders, technicians, marine workers and other professionals. Likewise, it is projected that local companies could benefit from opportunities in fabrication, marine services, logistics, engineering and other areas of the offshore supply chain.
Additionally, the Nigerian government wants more fabrication, equipment supply, technical services and training to take place locally rather than being outsourced entirely overseas.The projects are expected to provide opportunities for Nigerian workers to acquire specialised skills needed in the offshore oil and gas industry.
Authorities envisaged that increased demand from major offshore projects could help Nigerian businesses expand their capacity and participate in more sophisticated areas of the energy value chain.
Will the government policy translate into real impact for Nigerians?
One of the fundamental questions surrounding the government’s recent policy is: How will the government policy benefit an average Nigerian? Similarly, will the government lose money by granting tax incentives to IOCs?
Tax incentives mean the government may forgo some tax revenue that it would otherwise have collected from qualifying projects. The government’s argument is that without the incentives, some of these projects may not be developed at all.
It is believed that if the incentives succeed in attracting new investment, the government could eventually benefit through increased oil production, royalties, taxes from other parts of the economy, employment and wider economic activity.
The ultimate test, therefore, will be whether the economic benefits generated by the new investments outweigh the revenue forgone through the incentives.
Also, will the dividends of the investment reach grassroot communities? This is especially because decades of oil exploration in Nigeria’s oil-rich communities have robbed them of their livelihood due to persistent pollution from oil and gas fields.
What should Nigerians watch out for?
For many Nigerians, the success of the new policy may not be judged solely by the amount of investment announced but by the direct impact on Nigerians.
Key indicators will include, how environmentally friendly or sustainable are the activities of the approved project, how much of the projected $50 billion is actually committed, how many stalled projects move to Final Investment Decision, how much additional crude oil and gas the projects eventually produce, and how many Nigerian workers are employed.
Other critical concerns are how much project expenditure goes to Nigerian companies, how much equipment and infrastructure is produced or assembled in Nigeria. And whether Nigerian workers and companies are able to acquire capabilities that remain after the projects are completed.
READ ALSO: High taxation, insecurity, high interest rates top constraints facing Nigerian businesses – Survey
These concerns are critical, especially because groups of environmentalists across Nigeria are already criticizing the government move to resume exploration in the Niger Delta.
This is because the devastation caused by oil companies across the region has caused unprecedented levels of hardship, suffering and bitter memories for many families and communities. Remediation efforts and compensation oftentimes do not complement the damages caused.
Prospects
The new deep offshore incentive framework is essentially an attempt to solve two problems at once.
Nigeria’s bold move to unlock billions of dollars in investment that has remained on the sidelines because of the difficult economics and uncertainty surrounding some deep offshore developments has attracted global attention.
While the government wants to ensure that the resulting investments generate broader economic benefits for Nigerians, rather than simply increasing crude oil exports, a deliberate effort to scale up environmental protection regulations would boost confidence in Nigeria’s ambitious climate change targets as enshrined in its third series of Nationally Determined Contribution (NDC-3.0) submitted to the United Nations Framework Convention on Climate Change.
Nonetheless, if the new deep offshore policy delivers as intended, Nigeria could see new offshore projects, increased oil production, more employment, stronger local businesses and greater technical capacity.
But the real measure of success will be what happens after the announcements: how much money is actually invested, how many projects are developed, how much oil is produced, how sustainable are the projects and how much of the resulting economic value remains in Nigeria.
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