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In light of growing energy prices, Dangote Cement is considering other fuels

May 4, 2023 | Business | 0 comments

To lower electricity costs, Dangote Cement has stated that it will investigate the usage of alternative fuels. The organisation claims to have a cost-containment strategy to enhance its energy mix.

Compressed natural gas (CNG) is one of these plans for its vehicles. In the release of its results for the first quarter of 2023, the group made this comment. The result statement states that rising Automotive Gas Oil (AGO) prices, often known as diesel, led to a 7.9% rise in selling and distribution expenses over the previous year. The collective said:

Therefore, excluding central costs and eliminations, our Nigerian operations’ earnings before interest, taxes, depreciation, and amortisation (EBITDA) decreased by 19.3% to 158.6 billion at a margin of 56.6% (Q1 2022: 196.5 billion, 61.1%).

“Despite the high operating cost environment, we continue to expand on our cost reduction plan. The use of alternative fuel (AF) to enhance our energy mix, increased plant efficiency, and the usage of compressed natural gas (CNG) for our vehicles are all part of this cost reduction strategy.

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The result statement states that due to inflationary pressure, manufacturing expenses rose 6.2% to 163.7 billion in Q1 2023 from 154.1 billion in Q1 2022, and materials consumed fell 4.8% to 48.2 billion, indicating a decline in output volumes at the group’s Nigerian unit. When compared to the 55 billion recorded in Q1 2022, fuel and power consumption increased marginally by 2.2% to 56.7 billion in Q1 2023.

The Dangote Cement Group said that overall selling and administrative costs increased by 12.6% to 87.4 billion in the first quarter of 2023, led by an increase of 18.0% in transportation costs as a result of the sharp surge in diesel prices. According to the result release, inflationary pressure and the depreciation of foreign currencies also had a role in this increase.

Energy prices are increasing for Nigerian businesses.
Nigerian businesses have recently encountered a number of difficulties, particularly with the growing cost of electricity. The National Bureau of Statistics (NBS) reported that Nigerians were paying much more for petrol, diesel and other petroleum products in the first quarter of 2023. These prices are growing as a result of a few things.

Since crude oil is a commodity traded internationally, it is subject to the whims of international markets influenced by geopolitics. The conflict between Russia and Ukraine has also affected international commerce in various ways, and logistics and freight costs also impact Nigerian imports of petroleum products.

Dangote Cement is one of many companies looking for alternate fuels to save fuel and electricity expenses. BUA Cement stated that energy market disruptions are a concern for its operations during its investor presentation in November 2022 and that increased fuel prices have led to the group’s higher operating expenses.
What you need to know is: In place of premium motor spirit (PMS), usually referred to as petrol, cars can be powered by compressed natural gas (CNG), a kind of natural gas.