Pwani Oil Ltd is now seeking to sell local goods in dollars due to difficulties in accessing the hard currency to purchase raw materials.
On Monday, June 6, the Freshfri, Salit and Fry Mate cooking oils maker said its bankers are able to process half of the dollars the company requires to acquire the raw materials.
In a letter to its customers on May 25, the manufacturer highlighted the need for dollars for local purchases, warning that it was short of the currency to pay suppliers.
As such, Pwani Oil warned that they were at risk of running out of key raw materials used in manufacturing of oil products as well as soaps.
“We are faced with a situation where we may not have raw materials to be able to supply you finished products as per your requirements
quest that we bill you in USD and that you pay us in USD so that we can pay our suppliers and keep our raw materials coming,” the company said in the letter.
The company advised its distributors to use a rate of KSh 121 per dollar at the time.
“We request that your current and future debt be paid using USD currency. We will, of course, facilitate this by providing you with a USD invoice for the goods purchased and will continue to purchase,” the company added.
On Monday, Pwani Oil Commercial Director Rajul Malde announced the closure of its oil plants due to shortage of 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.