Business

Pwani Oil in Temporary Shutdown Due to Dollar Shortage

Pwani Oil Products Limited, the makers of popular household cooking oils-Freshfri, Salit, and Fry Mate, has shut down its plant for the time being. It blames this move on a lack of raw materials occasioned by insufficient dollars to settle supplier bills on time.

The cooking oil manufacturer said commercial banks were only processing half of the dollar orders it needs to pay suppliers of crude palm oil imports from Malaysia.

According to Palm Oil Commercial Director Rajul Malde, the firm is not getting sufficient dollars to operate the plant. Competition for the same oil from other global players notwithstanding.

The firm does not pay the oil suppliers on time and therefore loses out on suppliers’ priority list.

Pwani Oil says it cannot pay suppliers on time due to dollar shortage

Malde said the firm could only get between half a million to $1m per day while it needs at least $2- $2.5 million a day to keep its plant running and clear any shipments at the Mombasa port.

Matters from Pwani Oil have been further complicated by tough competition for crude palm oil and the fact that Indonesia has cut down on exports to meet domestic demand.

Available data shows that Indonesia is the leading producer of crude palm oil and makes for 60% of global edible vegetable oil shipments. The country is also a producer of sunflower, rapeseed oil and soya beans.

Pwani oil sources its crude palm oil from Malaysia.

Malde cuts the image of a pessimist who does not foresee any improvement in the current dollar situation unless there is a significant intervention from the Central Bank of Kenya to stabilise the greenback demand.

He added that Pwani Oil is expecting one consignment of palm oil in the middle of June, and then after that, there’s no more supply until the end of July. The one coming next month depends on dollar availability—whether the firm will be able to pay to release that cargo.

Pwani Oil Products Ltd, located in Mombasa, manufactures cooking oils, fats, laundry and toilet soaps.

The company was founded in 1980 as a coconut mill. In 1985 a corn oil processing plant was installed, and in 1988, the corn oil processing, a 10-ton batch refinery, was converted to process palm oil.

In 1993, it expanded to a 100 ton a day physical refinery. Today’s production capacity is 650MT a day of palm oil and soap production capacity of 250MT a day.

ALSO READ: Central Bank Denies that Kenya has Dollar Shortage


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