A leading fast-moving consumer goods manufacturer in Africa, Wilmar Africa Limited, has announced the temporary shutdown of its oil-producing plant due to some operational challenges.
According to the company, the situation can be attributed to a number of factors including the suspension of the implementation of the reversal of discounts on benchmark values by the government.
A statement issued by the producers of Frytol Vegetable Oil and Fortune Rice, and sighted by Citi Business News notes that the oil side of the business is facing some operational challenges that are affecting the business negatively.
It notes that since the introduction of the government’s duty discount on benchmark value policy in 2019, there has been a huge increase in cheap imported products into the country.
“This has made it very difficult for us to sell in the local market because imported oils from Asia are selling far cheaper than our product The unit cost of our oil is high as compared to the imported ones as we have to contend with all the overheads in our cost build-up. The government’s announcement of the reversal of the duty discount on benchmark policy was welcoming news; however. government has suspended action on this announcement,” the statement noted.
Wilmar Africa also explains that since Ivory Coast decided to regulate the price of oil in their market, they have set the price far lower than the prevailing price of local producers in Ghana.
This according to the company is making it uncompetitive in the market. Thus, sales have subsequently slumped significantly.
“To make matters worse, our export market, which has been complementing our local sales, has also been hit by non-availability of vessels to transport the product to our main export market – Senegal due to the Covid situation. These compounded problems resulted in our worse sales in December 2021 and the low sales continuing into January 2022,” the statement added.
In view of this, Wilmar Africa Limited states that with no space for storage due to low sales, it is compelled to take a temporary shutdown of its oil-producing plant and monitor the situation and is asking for the suspension of the collective bargaining agreement, CBA, negotiations, as they do not have the environment to negotiate in good faith.
The latest announcement of the suspension of the implementation of the benchmark discount policy until further notice was captured in a letter dated January 13, 2022, from the Ghana Revenue Authority and comes after a meeting held on January 12, 2022.
Below is the full statement from Wilmar: