Edible oil crisis looming after Kapa Oil cut operation capacity

Kapa Oil refineries is the manufacturer of Rina Oil, Prestige Margarine and Toss detergent

Oil in supermarket shelves

Kenyans are staring at a massive oil shortage after edible oil producing company Kapa oil refineries limited, the producer of Rina Oil, Prestige margarine and Toss said it is operating below capacity due to dollar shortage.

Kapa Oil marketing manager Sid Shah said operations have been compromised since there isn’t availability of raw materials warning that if the situation is not contained the market could see an increase in oil prices.

“Our operations have been hampered due to the dollar scarcity and inability to access raw materials, this could lead to a fresh hike in prices of edible oils,” Shah told the Business Daily.

The notice by Kapa oil comes after Pwani Oil temporarily shut down its operations due to the scarcity of the dollar which has made it hard for the company to secure raw materials.

The Kenya Association of Manufacturers has been trying to get the Central Bank of Kenya to intervene in the shortage of dollars.

However, CBK Governor Patrick Njoroge insisted that there was sufficient demand and supply for the dollar. Dr.Njoroge said the country distributes USD2 billion every month which should be able to cover the needs of the manufacturing sector.

KAM had raised concerns that the shortage had resulted in the emergence of a parallel exchange rate as banks take advantage to increase the exchange rates.

The association argued that its members who are the biggest importers of goods were buying the dollar at more than Sh120 compared to the Central Bank’s official exchange rate of 116.81 units as of end of May.

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 stabilise the dollar demand in Kenya,” Malde said.

KAM reported in April that banks had imposed dollar purchase limits, making it impossible to get sufficient cash to fulfill supplier obligations.


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