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NewsDay

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Agro-processor Pure Oil expands capacity

Business
PURE Oil, the producer of Zimgold cooking oil, will see its output more than doubling to 7 million litres per month following the acquisition of new machinery.

PURE Oil, the producer of Zimgold cooking oil, will see its output more than doubling to 7 million litres per month following the acquisition of new machinery.

BY NDAMU SANDU

The new output translates to 60% of the country’s demand, general manager Lister Mutakati said on Wednesday.

“We are here to produce and we will compete with imported oil. We are working to ensure that if there is any requirement for cooking oil in the country, we will be able to supply,” he said.

Mutakati said the expansion would be felt across the value chain as the company would require more bottles, boxes and labels, among other things. Under its buy local drive, Pure Oil sources raw materials locally with those that are not available being imported.

The company commenced full-scale production in December 2013 and $30 million has so far been injected.

He said the company bought 40% of the local soya beans, which was not enough. The big players in the industry are Pure Oil, National Foods, Olivine, United Refineries and Surface.

“This expansion will make us the largest refinery in the country,” Mutakati said.

He said intense competition in the industry has seen prices coming down from $4,30 in December 2013 to under $3.

Pure Oil is a joint venture between Export Trading Group Tanzania and Parrogate Zimbabwe Private Limited, which has operations in Zimbabwe, Zambia and Malawi for cotton contract farming and oil seed processing. Pure Oil employs about 650 workers.

Cooking oil imports have been rising since the introduction of the multi-currency regime in 2009 reaching a peak of nearly $200 million in 2012.

Imports tumbled to $80 million in 2013, further falling to about $42 million last year. In the six months to June, cooking oil imports were under $20 million.

Government has been giving local oil producers incentives to boost output. The incentives include reduced duty on raw materials and also modest protection from imported finished products in support of local production of cooking oil.

In addition, cooking oil was removed from the Open General Import Licence and Travellers Rebate meaning that it now attracts customs duty.

In his Mid Term Fiscal Policy Review, Finance minister Patrick Chinamasa proposed more stringent measures to curtail cooking oil imports.

He said the customs duty of 40% and 25% surtax has, however, not met policy expectations, mainly due to under-valuation of imported cooking oil.

“I, therefore, propose to review the current customs duty to 40%, and 25% surtax or $0,50 per litre, whichever is higher,” Chinamasa said.