18/06/2011 (Business Daily Africa) - A shortage of cooking oil appears to be looming as manufacturers send mixed signals about the fate of a hijacked ship that was carrying the entire industry’s shipment of palm oil-— the key raw material used for making the product.

Directors of major oil manufacturing companies have relayed conflicting statements, with Kapa Oil refineries and Pwani Oil expressing concern over the next source of supplies, even as Bidco East Africa allayed fears of a looming shortage.

The manufacturers are raising concerns over declining stocks of cooking oil in their warehouses with efforts to get alternative ships not bearing fruit.

According to officials at Pwani Oil products, shipping lines have been turning down their bid to find an alternative transporter for fear of hijacking.

MV Gemini, a Singapore-registered ship, was carrying 28,000 tonnes of palm oil meant for the region when it was hijacked by Somali pirates on April 30.

“Suppliers of palm oil in East Asia have said that shipping lines are not willing to release their vessels due to the increasing risk of attacks in the Indian ocean,” said Anil Shah, director Pwani Oil, a manufacturing of cooking oil.

He said shipping lines may be forced to use longer routes to access the Mombasa port meaning that the cost of securing raw materials will increase and in effect raise the prices of cooking oil in the market.

With stocks of some players in the sector expected to end in the next seven days it is expected that supply will be constrained increasing pressure on the remaining producers.

“We only have stocks to last us one week, it is clear that we will have to wait for quite long, there is no ship until June,” said Niral Shah, the managing director of Kapa Oil Refineries.

Mr Shah said the large number of ships held captive by the Somali pirates— estimated at about 30— have made the negotiation process long and uncertain.

He said the threat of imminent supply shortage was likely to spur panic buying that might serve to drain out stocks even faster.

Vimal Shah, managing director at Bidco East Africa, however downplayed the issue ruling out the likelihood of a shortage saying they have enough stocks and that the problem will be sorted before stocks run out.

“We don’t anticipate any shortage before the next ship is secured,” he said.

Kenyan manufacturers procure their palm oil supplies from Malaysia, Indonesia in East Asia with the Indian ocean being the most cost effective and fastest route to Mombasa.

They said the prices of the product may remain high despite falling palm prices as the risk attached to the route is expected to attract even higher insurance premiums.

The regional market is served by manufacturers who procure their supplies together to save on transport costs.

Palm oil is used to manufacture household products such as cooking oil, cooking fat, soap and cosmetic. Cooking fat and cooking oil form a basic part of the every day meal whose shortage is likely to affect the cost of food piling pressure on more pressure on the cost of living.