Oil firm cooks up controversy with cash demands

Africa Moyo —
OIL-PRODUCING firm, Pure Oil Investments, which manufactures the ZimGold cooking oil brand, has torched off a storm after allegedly ordering wholesalers to reject plastic money and bond notes as payment for its products, preferring the US dollar instead.

It is widely feared that apart from setting the wrong precedence, the company might promote unfair competition in the sector.

Pure Oil is owned 40 percent by NatFoods while the Export Trading Group Tanzania and Parrogate Zimbabwe hold a combined 60 percent stake.

Of late, consumers have been raising concerns on cash demands for ZimGold products. Government, through the Reserve Bank of Zimbabwe (RBZ), has been actively promoting non-cash platforms.

Mahomed Mussa, including other reputable wholesalers, have been declining plastic money and bond notes, allegedly at the instigation of Pure Oil.

A senior official at the wholesaler who spoke to The Sunday Mail Business on condition of anonymity said the business was simply complying with the producer’s directive.

“The producer told us not to accept plastic money and bond notes. They said they strictly need US dollars.

“I am not too sure why but that is the issue. As you can see, we sell all other products using plastic money apart from ZimGold cooking oil,” said the official.

Oil Expressers Association of Zimbabwe president Mr Sylvester Mangani said this was not an industry position.

However, Pure Oil head of operations Mr Rodreck Musiyiwa denied directing wholesalers and retailers to “discriminate between their cash and non-cash customers”.

He noted that like any other local business, the company is struggling to get foreign currency for its raw material imports.

“However, with the support from Reserve Bank, we have carried on producing with the foreign payments being made albeit at reduced throughput levels.

“We are, however, glad with the assistance we have been getting from the Reserve Bank of Zimbabwe under the difficult circumstances,” said Mr Musiyiwa.

On August 31, 2016, the RBZ issued Circular Number 5 of 2016 indicating that banks could make foreign payments on a matching principle of 1 to 1 for every cash deposited by the cooking oil producers.

The RBZ came up with the measure, which also applied to the fuel sector, to ensure availability of both cooking oil and fuel.

Mr Musiyiwa also claimed that some wholesalers generate cash sales on a daily basis and bank it directly into Pure Oil’s bank accounts, which enables it to settle some of its foreign currency obligations.

“The cash so deposited with banks, together with allocations from the Reserve Bank, has ensured settlement of our crude oil import obligations, thereby allowing consistent supply of cooking oil to the market,” added Mr Musiyiwa.

Last week, Industry and Commerce Minister Dr Mike Bimha urged aggrieved consumers to approach the relevant agencies that are able to address the situation.

The executive director of the Consumer Council of Zimbabwe, Mrs Rosemary Siyachitema said she hadn’t been appraised of the matter as she was away on leave.

In December, local oil producers reported that capacity utilisation in the sector had dropped to 35 percent from 60 percent recorded ten months earlier owing to foreign currency constraints.

The manufacturers have since approached the RBZ to canvas for an increase in foreign currency allocations. Pure Oil has this year taken a strategic decision to finance local soya bean farmers through contract farming.

Zimbabwe currently has four edible oil producing firms including Surface Investments, Pure Oil and United Refineries.