29/03/2011 (Addis Fortune) - The Ministry of Trade (MoT) has decided to collect all the edible palm oil from importers who ordered supplies from abroad at higher prices due to the international price increment, during a closed meeting with importers on Friday, March 25, 2011.

The price cap on 18 commodities, which was introduced on January 8, 2011, has been a bone of contention between importers and the ministry.

“This initiative was proposed by MoT to protect importers who are purchasing at higher prices and cannot sell the goods for more than 24.50 Br per litre due to the price cap,” Amakele Yimam, director of corporate communications for MoT, told Fortune.

The importers cannot sell their palm oil at a price other than the fixed one for the next six months, when the price cap will be reviewed by MoT.

However, the ministry will not oblige importers to hand over their shipments if they are willing to sell it respecting the price cap, according to Amakele.

The government will buy the oil from the importers at the same prices they paid to purchase it from abroad, as long as they show their order and payment documents. However, it will not cover the profit they may have enjoyed had it not been for the price cap.

Amakele is confident that this move will not harm the traders in any way but protecting them from a predetermined loss. The business people have a broad option to engage in other sectors that will not incur them a loss, he claimed.

“Since the introduction of the price cap, we have been distributing the palm oil according to the price cap,” Sabir Argaw, major shareholder and board chairman of Al-Sam International Plc, told Fortune. “However, we submitted a letter complaining to the ministry that the price increment at the international level prohibited us from distributing it through retailers at the cost limited by the price cap. I am happy about the ministry’s solution because it will save me from a loss.”

Al-Sam International is engaged mainly in the import, export, and distribution of consumer goods.

During the previous fiscal year, the volume of edible oil imports amounted to 222,141 tonnes, while a total of 217.2 million dollars was spent on its purchase.

Sabir is optimistic about returning to the business once issues with the price cap have been settled down.

“I will start the business in discussion with the government in the future,” he told Fortune.