A day after announcing that it was closing its plant over dollar shortages, Pwani Oil has instructed buyers of its local products to pay in dollars. This is the latest move from the company that is facing an acute shortage of the US dollar.
“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 Oil on Monday announced that it is shutting down its oil plant due to a shortage of dollars in the market which has left the company unable to pay its suppliers.
Pwani Oil, which manufactures Freshfri, Salit and Fry Mate cooking oils said that as of last week, bankers 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.
“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],” Malde said.
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“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 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.