May 2: The cooking oil industry of Nepal, which is struggling due to the delay in shipment of raw materials due to the Russia-Ukraine war, is now facing an additional problem.

The industrialists are in a tight spot after Indonesia halted the export of semi-processed palm oil.

The price of edible oil has been on the rise since the onset of Covid-19 pandemic. The price increased further due to the conflict between Russia and Ukraine, the two main producers of oil. It disrupted the supply chain of raw materials for cooking oil.

Nikhil Chachan, the operator of Birgunj-based Narayani Oil, said that additional problems have surfaced after Indonesia halted the export of semi-processed palm oil.

Indonesia halted the exports of palm oil since April 28 to control the price of oil in its domestic market. According to Chachan, the traders and importers can do nothing else than wait until Indonesia reviews the decision as per its commitment on May 7.

The domestic industries of Nepal process semi-refined palm oil imported from Indonesia. Most of the oil produced in Nepal is exported to India. Edible oil is the biggest contributor to Nepal's export trade of late. About 2 dozen industries in Nepal produce oil.

Prabhudayal Agrawal, manager of Annapurna Vegetable Products said that managing the raw materials is challenging. Agarwal claims that Indonesia controlled its exports a month ago. Agarwal told New Business Age, “Even though the export ban was announced only last week, consignment delivery has been disrupted since the beginning of April.” Russia's military operation, which has been going on for more than two months, has disrupted the supply of unrefined oil to Nepal. Nepal's oil producers used to import more than 80 percent of sunflower and soybean oil from Ukraine prior to the conflict. Russia is also a major supplier of sunflower and mustard to Nepal.

Importers remarked that the demand for soybean oil is growing as the imports of sunflower and mustard became uncertain. Director of OCB Food Suresh Rungta informed about the hike in price of cooking oil. Prices skyrocketed mainly due to disruption in supply of raw materials. Rungata said, the price of cooking oil, which was Rs 250 per liter two months ago, is now Rs 300.

According to the industrialists, the production cost of soybean oil has increased. Chachan said, “The price of semi-refined soybean oil, which was 1,900 USD per metric ton before Russia's military action against Ukraine, is now 2,100 USD.”