Pwani Oil has shut down its oil processing plant as it struggles to pay Malaysian suppliers amid stiff global competition.
The consumer goods manufacturer is experiencing an acute shortage of raw materials because of difficulties in accessing dollars to pay international suppliers on time.
“Getting sufficient amount of dollars required to support the factory in terms of getting sufficient raw materials is not happening. We are not even running the plant right now because of lack of raw materials [crude palm oil],” Pwani Oil Commercial Director Rajul Malde said.
Malde further noted that the company is competing with the rest of the world to access the same raw material from Malaysia. He said that the suppliers don't prioritize them because of payment hitches.
“We are competing for the same oil with the rest of the world and, therefore, prices are high. Added to that, we can’t pay on time so we don’t get priority in supply," he stated.
The Pwani Oil Commercial Director further noted that the situation was made worse after Indonesia tightened its export rules to prioritise domestic needs.
Indonesia accounts for about a third of the global crude palm oil exports, which make up 60 per cent of the world’s edible vegetable oil shipments.
The move by Indonesia to limit export left Malaysia as the main source of crude palm oil, the main raw material Pwani uses in manufacturing its cooking oil products.
Pwani oil manufactures a wide ride of products
Pwani Oil shutdown will affect millions of Kenyans as the company manufactures a wide range of cooking oil brands such as Freshfri, Salit and Fry Mate cooking oils which are famous among consumers.
The government had only a week ago dismissed concerns by the Kenya Association of Manufacturers (KAM) that persistent dollar shortages would trigger a crisis.
“The situation can only improve if the dollar situation improves. And I am not seeing the dollar situation improving on its own without the Central Bank intervening and releasing some of the dollar reserves that they are holding to stablise the dollar demand in Kenya,” Pwani Oil Commercial Director said.
