Concrete roads: Making a case for capacity utilisation in cement industry
Given the housing and infrastructure deficit prevalence in the country, Nigeria’s cement industry remains a core component in the building, construction and infrastructure sector. However, with a low per capita consumption still being recorded in the country, cement manufacturers are beginning to explore other measures to improve the capacity utilisation of their expanded operational facilities while promoting infrastructural development. FEMI ADEKOYA writes.
Having explored various alternatives towards increasing the demand for cement in the country, cement manufacturers may have found succour in the existing infrastructural gap in the country as a means of achieving optimal utilisation of the commodity.
Aware that government remains the largest consumer of cement in the country with an estimated 50 per cent of total consumption, cement manufacturers have commenced a campaign to increase use of concrete for road construction.
According to Agusto & Co, total demand for cement was estimated at 21 million tonnes in 2014, with the two major players (Dangote Cement Plc and Lafarge Africa Plc) accounting for over 90 per cent of total cement sales. Compared with a yearly cement production of about 30 million metric tonnes, which is expected to increase with various ongoing expansion projects, stakeholders believe Nigeria’s per capita consumption of the commodity remains relatively low compared to Asian and European countries.
Indeed, the credit rating and risk managing agency noted that Nigeria’s huge market size, high urbanisation rate of 3.5%, low per capital cement consumption of 125kg and estimated housing deficit of 17 million are key drivers of growth for the Nigerian Cement Industry in the medium term.
The frequency of road and bridge reconstruction as well as rehabilitation of social infrastructure emphasises government’s continued patronage of the industry but also widens the demand-supply gap which currently exists if utilisation of the commodity does not increase in comparison with the expansion projects.
For instance, President, Dangote Group, Aliko Dangote stated that the group’s cement production has since surpassed Nigeria’s average total consumption of around 20milion metric tonnes, even as he noted that Nigeria’s consumption profile of the commodity remains low when compared to other African, Asian and European countries.
According to him, it would be to the benefit of Nigerians and even the federal and state governments to embrace the option of using concrete for roads in the country, adding that aside from being very cost effective, concrete roads were more durable and that the maintenance cost was near zero.
He said asphalt is no longer in vogue in developed climes, stressing that the construction of concrete road is faster and can last for half a century compared to asphalt, adding that concrete roads are 20 per cent cheaper to build. According to him, in the construction of concrete roads, the cement raw materials are readily available while asphalt is imported into the country.
Similarly, the Nigerian Institution of Structural Engineers (NISTRUCTE) has called on the nation to switch over to the use of concrete for road construction.
President of the Institution, Samuel Ilugbekhai, said: “concrete pavements have been found durable and last longer than bituminous roads. The time has come when Nigeria should step up the use of concrete for roads especially now that the country has increased its potential to produce cement at lower prices and even exporting to other countries”.
He regretted that the country’s dilapidated roads have become death traps while the economic cost to the nation is becoming too high.
Also, the Chairman of Sea Dredge Construction Company, Ayo Folorunsho said concrete roads are the future and the way to go, even though the cost may be high on the short run, it will be economical on the long term given the increasing capacity of cement companies in Nigeria.
Nigeria’s huge market size, high urbanisation rate of 3.5%, low per capital cement consumption of 125kg and estimated housing deficit of 17 million are key drivers of growth for the Nigerian Cement Industry in the medium term…The frequency of road and bridge reconstruction as well as rehabilitation of social infrastructure emphasises government’s continued patronage of the industry but also widens the demand-supply gap which currently exists if utilisation of the commodity does not increase in comparison with the expansion projects.
He said more people die from bad roads than collapsed buildings, urging the country to take the issue of concrete pavements more seriously.
Similarly, the Permanent Secretary, Federal Ministry of Works, D.S. Kigbu called on Structural Engineers to champion what he called ‘structural integrity and reliability.’
He regretted the number of Nigerians dying as a result of bad structures and tasked the engineers to step up action to put an end to collapse of structures and other engineering problems.
The President of the Nigerian Society of Engineers (NSE), Isaac Ademola Olorunfemi, said the Society was considering an Infrastructural Scorecard for states in the country to ginger governments in their developmental strides.
Agusto & Co believes that public private partnerships (PPP) are the key opportunities for continuous growth in the Nigerian Cement Industry in the short to medium term considering the slowdown in revenue accruing to FGN amidst fiscal discipline and stringent debt management practices.
Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. With the federal government providing a boost to the infrastructure and various housing projects coming up in urban as well as rural areas, the cement sector has enough scope for development in the future.
The weakness in the international crude oil prices and other commodities should help bring costs under control and improve profitability of the sector. If inflation comes under control, a likely lowering of interest rates would be a big positive for the cement sector. Despite the current challenges that dent the growth of the industry, the long term drivers for growth remain intact. Higher government spending on infrastructure, robust growth in rural housing and rising per capita incomes are likely to augur well for the cement sector.