Rwanda’s sole cooking oil company, Palmalac, is set for liquidation after failing to pay an outstanding debt of Rwf700m to Rwanda Development Bank’s (BRD).
The loan, which was initially Rwf600m but rose due to interests, was acquired in 2009 by businessman, Omar Nzamwita, together with a business partner with whom he owned the company during its initiation.
“The company is being sold off because its owners do not have the capacity to repay their outstanding loans to the bank,” Andrew Kamana, the Head of Workout and Recovery at BRD told Business Times yesterday.
According to Nzamwita, the situation is unfortunate and the company would not be heading for liquidation if his partner, who he refrained to name, had not sabotaged its operations.
“Together with my business partner, we acquired a loan of Rwf600m to start up Palmalac in 2009. It cost us a total of Rwf1.2b to get it running and indeed it was profitable, until we had misunderstandings,” Nzamwita said.
“He decided to opt out; but suddenly, he went to BRD and told them that Palmalac cannot repay its loans; BRD believed him and instantly labelled my company red, which meant that I could not even acquire loans from other banks.”
He added that BRD resolved to sell the cooking oil company, admitting that he had given up his fight to retain it although it had gained ground in the market.
The company also faces competition from regional companies like Uganda’s Mukwano Industies and Kenya’s BIDCO Oil Refineries.
“In three months, we sold close to 500 tonnes of cooking oil and provided good competition to Mukwano and Bidco’s imported products. With all the customers we were getting, it is so sad that after only nine months of operation, Palmalac was labelled a bankrupt company,” Nzamwita lamented.