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HomeWealthShortage of Dollars Prompt Pwani Oil To Shut Plant

Shortage of Dollars Prompt Pwani Oil To Shut Plant

Pwani Oil has temporarily shut down its oil plants due to shortage of raw materials.

The company that manufactures Freshfri, Salit and Fry Mate cooking oils said it has difficulties in accessing dollars to pay its suppliers.

According to Pwani Oil Commercial Director Rajul Malde, its bankers are able to process half of the dollars the company requires to acquire the raw materials.

“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

“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,” Malde said.

Malde noted that the situation which they are currently facing can be averted but only when the dollar situation improves.

“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,” he added.

In May, the Central Bank of Kenya directed commercial banks in the country to begin rationing dollar sales to manufacturers and importers.

The banks complied immediately setting a daily dollar transaction cap of $50,000.

The move prompted the Kenya Association of Manufacturers (KAM) to demand CBK to release the excess dollars above the statutory levels of four months equivalent of import cover into the market.

“The Central Bank has over five months of import cover as a reserve, and this can help stabilise the market through the current uncertainties. This would create confidence in the market and ease supplies,” KAM said.