With a bag of cement selling for about N10,000, blamed on the high cost of production, consumers are left to bear the ultimate burden, findings by Pinnacle Daily have revealed.
Although the three giant cement companies in Nigeria, Dangote Cement, BUA Cement, and Lafarge Africa, generate their own electricity, energy costs significantly impact their operations and raise their unit costs of production.
The finding revealed that Lafarge Africa and Dangote Cement passed a higher burden of energy costs to consumers than BUA Cement.
Lafarge Africa began generating its own electricity in July 2011 when it commissioned a ₦23 billion power plant in Ewekoro, Ogun State.
Dangote Cement has been generating its own electricity since at least 2013, when its Ibese plant was producing significant amounts of power.
BUA Cement has been generating its own electricity for years and has recently announced a major expansion of this practice in July 2025.
However, Pinnacle Daily analysis of the three giant cement manufacturing companies revealed that Lafarge Africa and Dangote Cement have a higher percentage of energy costs to cost of sale passed to consumers than BUA Cement.
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When such a situation occurs, analysts say it means a company will either increase the cost of its product or be prepared to report a lower profit margin.
A breakdown of the Lafarge Africa energy cost as a cost of sale in percentage terms for the first half of this year, relative to the same period last year, shows the cost passed to customers increased from 65.02 per cent in June 2024 to 66.27 per cent in June 2025.
This is as Lafarge Africa’s energy cost rose from N96.19 billion in June last year to N146.58 billion in June this year, and its cost of sale from N147.94 billion to N221.21 billion, respectively.
Dangote Cement’s energy cost-to-cost-of-sale ratio in percentage terms rose from 44.98 per cent in June 2024 to 45.36 per cent in June 2024, following an increase in its energy cost from N374.82 billion to N387.19 billion and cost of sale from N833.27 billion to N853.56 billion in the period under review.
On its part, BUA Cement’s energy cost to cost of sale in percentage dropped from 27.67 per cent to 26.45 per cent, making it the lowest figure among the three giant companies to their customers.
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In the review period, its energy cost rose slightly from N70.47 billion to N77.91 billion, while its cost of sales rose from N254.66 billion to N294.55 billion.
A high energy cost as a percentage of sales is significant, as it indicates a company’s profitability is highly sensitive to energy price fluctuations, which could lead to lower profit margins or the need to increase prices, financial analysts say.
A look at their financial performance shows that Lafarge Africa grew its profit from N29.35 billion to N132.68 billion, Dangote from N189.90 billion to N520.46 billion, and BUA Cement from N34.25 billion to N180.9 billion.
Over the years, the Manufacturers Association of Nigeria (MAN) has been expressing concern that electricity is a critical input in manufacturing processes.
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“It has a significant impact on production cost and prices of products,” it stated.
The association lamented this in a statement earlier this year on its kick against the incessant increase in electricity tariffs by the government.
It argued that such action is seen as hindering the performance of the sector and the growth of the economy.
“The persistent increase in tariffs means that consumers will continue to bear the brunt of the inefficiency in the electricity value chain,” MAN added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
