09/06/2011 (Business Daily) - A ship carrying 30,000 tonnes of palm oil — used in the making of cooking oil — has docked at Mombasa port, allaying fears of shortage of the product triggered by the April hijacking of another vessel loaded with the raw material.

Kapa and Pwani Oil refineries had said their stocks ran out on May 25 after Somali pirates hijacked a Mombasa-bound ship carrying palm oil.

The processors, who order the raw material in one consignment to save on transport costs, said the stock could last them for about three weeks before they order for more at a time when ship owners are reluctant to ply the Mombasa route due to rising cases of piracy off the coast of Somalia.

“What remains is clearance by the Kenya Revenue Authority (KRA) and the stock can be ready for use,” said Mr Rajul Malde, the managing director of Pwani Oil Refineries. Mr Malde said a tanker, MV Theresa Padang, with a shipment valued at Sh3 billion, had sailed from port Penang in Malaysia and docked at Mombasa port on Tuesday.

Mr Vimal Shah, the Bidco East Africa CEO, said the stocks held by the pirates on the high seas could lead to huge losses if they are not released on time. “Insurance companies are supposed to shoulder the losses, but this will translate to higher premiums,” he said. He said the hijacked stock, if held for long, might become harmful to humans. Officials at Nakumatt Holdings, the largest chain store in the region, had earlier told the Business Daily that suppliers of cooking oil were rationing supplies on fears that they might not get enough stocks in time.

Ship Hijacked

MV Gemini was hijacked on April 30 while loaded with 28,000 tones of palm oil worth about Sh2.7 billion. Pirates are still holding it.

Palm oil is also used in the making of soap, margarine, and cosmetics. Increased supplies on improving weather conditions in key production areas of Malaysia and Indonesia are expected to reduce the price of palm oil by as much as 30 per cent starting July. High crude oil prices had seen increased conversion of palm oil into biofuel, piling pressure on prices of the commodity. Processors, however, said that the weak shilling, which is currently trading at an all time low of 87.50 to the dollar, might cancel out the effects of falling international prices.

Local prices of cooking oil and related products have increased by a record 30 per cent in the past five months.