By Elizabeth Adegbesan, with agency report
Nigeria’s second-largest producer of palm oil, Okomu Oil Palm Plc, said illegal shipments of palm oil and weaker consumer income is affecting the company’s sales of palm oil in the country.
Chief Executive Officer of the company, Mr. Graham Hefer, disclosed this during a telephone conversation with Bloomberg .
Hefer stated: “There is a surge of illegal shipments from neighbouring West African countries in recent months contributing to oversupply of the domestic market. There are fears the situation may get worse if the government gives import waivers to some people for political reasons ahead of 2019 general elections, as happened in the past.
“Central Bank of Nigeria (CBN) in 2015 stopped importers of 41 items, including palm oil, from getting foreign exchange from official channels. That helped to support local producers and conserve dollars after the price of crude, the nation’s major revenue earner, plunged in mid-2014. The measure was a boon to Okomu as its revenue surged 47 percent and profit rose 85 percent in 2016.
“While the restriction remains, palm-oil shipments increased last year as importers gained more access to foreign exchange following a new trading window introduced by the CBN for investors. There hasn’t been enough demand to absorb all that supply as Nigeria recovers from its worst economic slump in 25 years,” he said.
According to him, Okomu sells palm oil locally and exports rubber. It currently mills 30 metric tons of palm oil per hour and plans to double its capacity by 2020 on the completion of a $50 million plant. The company operates 33,000 hectares (82,000 acres) of oil palm and rubber trees.