Kapa Oil Refineries has become the second major manufacturer to come out and reveal that it is facing possible shut down over the dollar crisis that has hit Kenya.
Kapa Oil says that it is currently operating below capacity with a high risk of shutdown due to dollar shortage and constraints in the global supply chain for crude palm oil.
Centum sells Sidian Bank to Nigerians at Sh. 4.3 billion
“Our operations have been hampered due to the dollar scarcity and inability to access raw materials. This could lead to a fresh round of hike in prices for edible oils,” Kapa Oil Refineries marketing manager Sid Shah told the media.
This revelation comes barely two days after Pwani Oil announced that it was shutting down one of its plants because it has been unable to access US dollars to pay suppliers.
A day after announcing that it was shutting down one of its plants, Pwani Oil said that it would start asking its customers to pay in dollars for its local products.
“Yes, [selling local goods in dollars] is an option given to my distributors,” Pwani Oil commercial director Rajul Malde said on the dollar billings for local supplies. The company told its distributors to use a rate of Sh. 121 per dollar. However, the company said that the rate will keep fluctuating.
Pwani had earlier said that banks were only processing half of the dollar orders it requires to pay the suppliers of crude palm oil imports from Malaysia amid stiff global competition.
Malde added that to run smoothly, Pwani Oil requires up to USD 2.5 million per day. It is however only able to get about USD 500,000.
“At the moment, based on the inflows from banks, we are only able to source between $500,000 and $1 million a day against a requirement of $2- $2.5 million a day. So we are only getting half of what we need, sometimes even less than half,” he said.
The Central Bank Kenya has however been dismissive of the complaints from manufacturers. According to the Central Bank Governor Patrick Njoroge, manufacturers under the Kenya Association of Manufacturers who are complaining are just small fish in a large sea that has adequate dollar supply.
Njoroge says that the foreign exchange market transacts about $2 billion of the US currency every month which is enough to meet demand from importers and corporates.
